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Optimism reigns on Wall Street during the day. A strong final sprint ensured that all of the leading indices ended in a positive for March, and the enthusiasm seems to continue over Easter, and into April.
When the stock exchanges closed on Monday, it was clear that both the S&P index and the Dow Jones index had set new records:
- The S&P 500 index, which consists of the 500 largest and most important companies listed on the US, closed 1.44 percent higher than the stock exchange opening
- The technology-dominated Nasdaq index rose to 1.67 percent
- The traditional key index Dow Jones, consisting of 30 hand-picked supposedly important stocks, closed 1.12 percent and 372 points higher than at the opening of the stock exchange
The broad stock market rise comes after both strong figures from the US labor market, and after the news of the massive infrastructure plan that US President Joe Biden presented last week.
– This is a V-turn with a capital letter, in its introduction. The only thing that can stand in the way now is a new shutdown of the economy to limit new corona mutants, or a boom from the Fed. No one seems imminent, says Tony Dwyer, chief strategist at Canaccord Genuity to the Wall Street Journal about the stock market rise.
“It’s hard to look around and find any particular reasons to be negative,” Baird strategist Ross Mayfield told Bloomberg.
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– We had employment growth in March far above expectations, and government interest rates have largely remained unchanged. It is one of those times where good news is actually good news, he says.
Extremely strong job numbers
On Good Friday, the official labor market report also came from the USA, with a far greater increase in employment outside agriculture than expected, with 916,000 new positions. Statistics are a key indicator of the US economy, and are often referred to as “the most important figures of the month”. This is by far the largest increase since October 2020. In comparison, there were 379,000 new jobs in February and 166,000 in January.
In advance, it was estimated that 675,000 new jobs would be created in March, based on a survey conducted by economists at the Dow Jones and Wall Street Journal. Other analysts lamented an estimate of one million. At the same time, another survey showed that it would fall to six percent.
Massive new investments
Joe Biden’s new infrastructure plan includes around 2,000 billion dollars in investments over eight years, equivalent to 17,000 billion kroner, or one and a half oil funds. The plan was presented shortly after Biden received through the $ 1900 billion corona support package.
There will also be tax increases to finance the plan. The corporation tax will be increased to 28 percent from 21 percent.
On Monday, Biden denied that companies would move out of the United States to avoid the increased taxes.
– Absolutely not. There is no proof of that, he said according to Reuters.
Before Trump lowered the corporate tax rate in 2017, it was 35 percent.
Strategist Savita Subramanian at the major bank Bank of America nevertheless warns against the effects of the tax increase, and believes the market is probably blind to the positive.
– I think the market prices after the good news about infrastructure. “I do not think the market has necessarily priced in the negative with the plan, and that is how we are going to pay for this,” Subramanian told CNBC, adding that we can expect a setback soon.
Tesla rose, Gamestop fell
Several of the major technology stocks reach record prices on Monday.
- Google owner Alphabet rose 4.1 percent and traded at $ 2,225.55 apiece
- The Facebook share rose 3.4 percent, and was traded for a while for a record high 310 dollars share
- Microsoft rose 2.77 percent and traded at $ 249 apiece
The Tesla share was traded at 695 dollars from the start on Monday, up around just under five percent. When the stock exchanges closed, it was traded for 691 dollars.
The rise comes after the company this weekend presented strong production figures. Tesla reported that it produced 180,338 cars in the first quarter, and delivered 184,800. Deliveries were expected at 168,000, according to CNBC.
– We are encouraged by the strong reception Model Y has received in China and we are well on our way back to full production capacity, the company writes in a press release.
At the same time, the share of electric car competitor Nikola fell close to five percent. It comes after Nikola founder Trevor Milton sold off massive amounts of shares just before Easter, for $ 49 million. Apparently, he first reported the sale of 3.5 million shares to the US Financial Services Authority two days later, on Good Friday, according to the Financial Times.
Gamestop fell 10 percent from the start after the board of Gamestop presented plans to sell 3.5 million shares, or for up to one billion dollars. It is in a filing to US regulators the information appears.
The money will be used for general company purposes and strengthen the company’s balance sheet, and can also go to new initiatives and product development.
Many have asked Gamestop to use the opportunity after the sharp price increase on the Stock Exchange to raise more capital. The higher the share price in such a capital raising, the more new capital the company receives to issue new shares. For today’s owners, it will thus be an advantage to have a high share price in such a share issue, since they then lose less of their ownership share in order to receive the new money.
Gamestop also states that it had a revenue growth of just over five percent in February and 18 percent in March, compared with similar periods the year before.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases using a link, which leads directly to our pages. Copying or other form of use of all or part of the content, can only take place with written permission or as permitted by law. For further terms see here.
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