The US economy is currently experiencing its worst decline in decades. Many people and businesses that have been severely affected by the coronavirus are waiting for the government to help. Hopes for the adoption of necessary measures to support the economy and the start of vaccination are key points that can significantly affect the financial market this week.
On Friday, the major stock indexes on wall street jumped to record highs. All this is undoubtedly due to progress on the COVID-19 vaccine and expectations of further incentives. According to analysts' forecasts, the US Federal Reserve will still strengthen its bond-buying program at the next meeting of the FOMC Open Market Committee, that is, on December 16.
The Dow Jones jumped 0.8% or 248 points, to end Friday's trading at a record high. Similar dynamics in the S&P 500 by 0.9%, which in the end is also a new record high. The NASDAQ Composite index was not left out, rising 0.7% to a record of 12.464 points.
This week, we can hardly expect a significant rise in stock indexes. After the record figures of the past week, they are likely to expect a lot of volatility. This will largely be due to new restrictions that should soon come into force in order to contain the further spread of the virus.
However, data released last Friday showed the slowest growth in employment in the US for half a year. The figures released remind the government that it is time to revive the country's numb economy with a new fiscal stimulus bill. If Congress does not take timely action in this regard, more than 13 million Americans will lose their unemployment benefits on December 26.
Finally, after a long standoff between Republicans and Democrats, things got off the ground: the aid plan, which provides $908 billion in funds to fight the virus, received support in Congress last Friday. However, Senate majority leader Mitch McConnell has the final say. There is a high probability that he will simply not agree to such a large-scale support package, because before that he insisted on keeping it at the level of only $500 billion.
There are not so many options for the development of events in this case: either adopt a budget of $1.4 trillion by December 11, or take a risk and close the government. Congress can also approve a resolution on spending without including incentives.
Any news about a new stage in the fight against the pandemic – the start of vaccination - is important for the financial market. The Food and Drug Administration (FDA) Advisory Committee is scheduled to hold a meeting on Thursday on whether to issue an emergency use permit for the COVID-19 PFE vaccine. At the same time, the UK is already ready to become the first country to distribute a vaccine developed by Pfizer and BioNTech this week. Last week, the British government hastened to grant permission for the emergency use of Pfizer and BioNTech vaccines in England.
This year, the UK GDP is experiencing the largest drop in the last 300 years, as reported by the country's head of Finance Rishi Sunak. According to him, this economic damage will be felt for a very long time. The UK economy is not expected to return to pre-crisis levels until the fourth quarter of 2022.
The first doses of the vaccine are scheduled to be delivered on Tuesday, December 8. This will be primarily given to people over 80 years of age, medical workers, as well as staff and residents of nursing homes. Experts believe that by the end of 2020, about 20 million people will be vaccinated worldwide.
