US stocks posted strong gains for third consecutive week.. Why?

U.S. stock indexes posted significant gains during trading in the week ended Nov. 17, extending their streak of gains for a third straight week, supported by a slowdown in U.S. inflation and a decline in U.S. Treasury yields and government shunning. shutdown display.

At the close of yesterday’s session, on Friday, the index rose Nasdaq 100 The index ended up 0.03% at 15,837.99 points. S&P 500 At the level of 4514.03 points, the increase is estimated at around 0.13%, while the index remained stable. Dow Jones The industrial sector has approached the last session’s closing level of 34,947.29 points.

The most important factors that affected the performance of the US stock market this week

A strong recovery in risk appetite in equity markets supported US equity gains in the final week as the VIX 500 volatility index hit an 8-week low of 13.80 points, down 2.61% on the week. This reflects a decline in investors’ fears.

The increase in risk appetite in equity markets is due to several factors, the most important of which is the US inflation data. Similarly, US stocks received strong support as a decline in US Treasury yields and the country avoided a government shutdown scenario. Below, we can clarify how these factors supported the US stock market’s strong rally:

First: Inflation is slowing in the US

U.S. inflation slowed significantly last October, with the annual consumer price index hovering around 3.2%, while market expectations were for a drop of just 3.3%, according to official data. The annual US core inflation rate (excluding energy and food prices) fell to 4.0%, while market expectations indicated that inflation would have eased to 4.1%. Last September.

Accordingly, investors’ risk appetite in the US stock market has risen strongly, with markets optimistic that the US Federal Reserve has ended its monetary tightening cycle and will not raise interest rates again at its next meetings. This reflected positively in the performance of US stocks this week.

Second: A decline in US Treasury yields

The recovery in US equity performance came on the back of a decline in US Treasury bond yields of various terms as a result of negative US inflation, which strengthened investors’ reluctance to buy bond yields in favor of equities. For example, losses on US 10-year Treasury yields this week were around 4.58%. Markets believe the Federal Reserve in particular has ended its battle to contain high inflation as investors believe bond yields have already peaked. And interest rates cannot be raised again.

Third: The US avoided a government shutdown scenario

Last week, the US Congress reached an agreement to create a temporary draft law to avoid a government shutdown, which was then referred to the upper chamber – the Senate – for approval. Finally, US President Joe Biden signed the temporary draft law. Yesterday, Friday, it led to a fall in fear. The economic and financial conditions of the world’s largest economic power and its possible negative effects on the US economic growth, in turn, strengthened the performance of US stocks last week.

How has the weekly performance of US stocks been affected by these positive developments?

As a result of the above positive factors, the index achieved a weekly gain S&P 5002.24% i.e. the index gained by 98.80 points and the index achieved Dow Jones The industry average gain is estimated at around 664.14 points or 1.94%. Nasdaq 100 The weekly rate is about 1.99%, which means it has risen by 308.87 points this week.

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US stocks have had their best weekly performance since the start of the year!