Stocks rose on Monday after US authorities granted full approval to the vaccine manufactured by Pfizer and BioNTech. Such is expected to alleviate the ongoing increase in COVID-19 cases brought by the highly contagious Delta strain.
Accordingly, the S&P 500 was able to bounce off last week's low and close 0.1% higher yesterday. Mixed data from US also contributed to the rally because the report on home sales exceeded expectations. However, PMI data slowed to an eight-month low.
Nevertheless, massive gains were observed in energy companies, thanks to oil surging above $ 65 in New York. Then, further moves will depend on the upcoming Jackson Hole symposium as it will provide insight on how and when the Federal Reserve plans to scale back bond purchases.
"The gains last week couldn't make up for the losses following the Fed confirming its intentions to taper its purchasing program," said Chris Larkin, managing director at E * Trade Financial. "Amid another record high last Monday, it's remarkable that we're looking to start the week yet again on the upside. All eyes will remain on the Fed as investors will be looking for more guidance on the taper from Powell's speech at Jackson Hole, "he added.
Earlier, Dallas Fed President Robert Kaplan said he is willing to change his mind on early tapering if the Delta variant persists and hurts economic progress. In addition, Treasury Secretary Janet Yellen approved Jerome Powell for a second term as Fed chairman, which reduces uncertainty over the course of monetary policy.
"Strong economic growth and corporate earnings, coupled with a still flexible Fed, means the stock environment remains favorable," said David Lefkowitz, US head of UBS Global Wealth Management. "As a result of our estimates, we are raising our targets for the S&P 500 for December 2021 by 100 points to 4600 and for June 2022 by 150 points to 4800."
Beyond the Fed's comments, investors will also monitor the latest US manufacturing, GDP and employment data this week. Approval over President Joe Biden's $ 4.1 trillion economic agenda will be considered as well.
Other important events for this week are:
- Bank of Korea policy decision and briefing by Governor Lee Ju-yeol (Thursday);
- Jackson Hole symposium (from Thursday to Saturday);
- data on US GDP and jobless claims (Thursday);
- July report on US personal income and spending (Friday).
