The equity market has been on a tear, showcasing a remarkable rebound from the downturn experienced on August 5th. This strong comeback has been attributed to various factors, with former White House Communications Director Anthony Scaramucci offering insights into potential reasons behind the market’s resurgence.
The Nasdaq Composite and the S&P 500 Index continued their upward trend for a sixth consecutive session on Thursday, driven by strong earnings reports, indications of slowing inflation, and signs that the economy is avoiding a hard landing. These positive developments have encouraged investors to further increase their equity holdings.
The market collapse on August 5th stemmed from concerns about economic growth and the unwinding of yen carry trades. This one-day sell-off resulted in significant losses for major indices, with each declining by over 2.5%. However, since the crash, the three averages have made impressive gains. The Nasdaq Composite, S&P 500, and the Dow Industrials have rebounded by 8.6%, 6.9%, and 4.8%, respectively, since August 5th.
On Thursday, the market rallied further following the release of positive economic indicators. These included a decrease in weekly jobless claims, a smaller-than-expected contraction in manufacturing activity in New York and Philadelphia, and a robust retail sales reading. The S&P 500 Index, a gauge of broader market performance, is currently at a three-week high.
Scaramucci suggests that the market’s rebound towards all-time highs might be linked to the rising poll numbers of Democratic Presidential candidate Kamala Harris. According to FiveThirtyEight, a polling analytics website, Harris has a lead over Republican candidate Donald Trump by a margin of 46.3% to 43.5%. Scaramucci believes that “investors are relieved America won’t have to live under an unstable wannabe autocrat.”
In a separate post, Scaramucci commented on Trump’s psychological state, suggesting that “Trump psychologically is coming to grips with losing this election. He is growing darker as a result of it. Will be a rough 81 days.” It’s important to note that Harris has yet to publicly announce her economic agenda or outline specific policy plans for her potential presidency. She is scheduled to deliver a major economic speech in North Carolina on Friday.
The SPDR S&P 500 ETF Trust (SPY), an exchange-traded fund tracking the S&P 500 Index, concluded Thursday’s trading session with a 1.71% increase, reaching $553.07.
