The Coronavirus pandemic is giving investors in the US a headache. There has been so much volatility in the stock market for months. Investors simply cannot predict, with even a little confidence, about where the stock market will go in the near future. But even compared to the volatility of recent months, the volatility in the market this week is extremely high.
Stocks rallied on Monday, 18 May 2020 after Moderna announced successful pre-trials on a Coronavirus vaccine. Since then the market has been showing a trend of upswings and downswings continuously. This is because the investors are very quick to respond to any news right now and that is showing in the market. The Dow Average, which is an estimate of where the overall market is trending has also been showing similar volatility this week.
Dow Average Rises Again
The Dow Average opened the day at 24455.94 points on Wednesday, 20 May 2020. Throughout the day, after a string of positive news, the average continued to rise. The average closed at 24573.62 points. This was a rise of 369.04 points or 1.52% compared to the previous close. This rise came a day after the average fell by 270.42 points on Tuesday, 19 May 2020.
Why Did The Average Rise?
There were many reasons that led to the rise of the average. First, investors were reacting to news from many different states in the US. These states announced plans to slowly roll back their lockdowns. This would lead to many stock market companies to perform better. Investors were bullish on this news.
Moreover, large chains such as Lowe and Target announced their Q1 earnings reports. Both companies recorded sales and profits that are much higher than market expectations. Additionally, even tech company stocks such as Facebook and Amazon rose through the day. All this caused the Dow Average to increase on the day.
What Next For The Average?
The Dow Average is likely to continue to be volatile over the next few days. The rise on Wednesday, 20 May 2020 came despite warnings from the Federal Reserve and the WHO. But if there is further negative news on any, it is likely to cause investors to be bearish which will cause the market to fall. Positive news will lead to bullish behaviour causing the market to rise. Thus, the average will be volatile for the coming few months.