Wall Street has seen an impressive start to the second quarter of 2021. The S&P 500 rose 0.4%, seeing its second consecutive record close on Apr 8. Notably, the tech-heavy Nasdaq Composite index also jumped 1% on the same day. The upside can be largely attributed to strength in some major tech players like Apple AAPL, Netflix NFLX and Microsoft MSFT, all of which surged more than 1%. Going on, the Dow Jones Industrial Average also inched up 0.2%.
There are several factors which are instilling optimism in the U.S. market. The first and foremost is the accelerated coronavirus vaccine rollout that has induced hopes of faster U.S. economic reopening of non-essential businesses and return to normalcy. Adding to the optimism, President Joe Biden now aims at distribution of 200 million coronavirus vaccines within his first 100 days since joining office, per a CNBC article.
Moving on, the Fed’s continued dovish stance is also increasing chances of faster U.S. economic growth recovery from the coronavirus pandemic-led slowdown. The central bank has decided to maintain rates near zero until 2023, at least. Moreover, the central bank has raised its economic growth outlook considering the vaccine and stimulus optimism and it also expects higher inflation this year. The Fed has lifted its forecast for GDP growth to 6.5% in 2021 from 4.2% stated in December 2020. It has also raised the economic growth forecast from 3.2% to 3.3% for 2022. Moreover, growth is likely to cool down in 2023 to 2.2%. The Fed has predicted the longer-run growth measure at 2.3%. Importantly, the Fed predicts unemployment to decline to 4.5% from 6.2% at present.