The NASDAQ Composite gains for a third day
The tech-heavy NASDAQ Composite rose for a third straight session yesterday after a period of losses, by 0.53% to 7,615. Stocks were helped by global central banks’ dovish stance boosting investor confidence. The European Central Bank said that it is maintaining its rates for now. Ten-year German bund yields have fallen to a new low of -0.24%, and ten-year Treasury yields are at +2.12%.
Accommodative monetary policy rescues stocks
The Fed is now mulling over cutting rates. Loose monetary policy has been one of global stock markets’ biggest drivers for the last decade. The Fed’s decision to avoid hiking rates earlier this year gave US stocks one of their best quarters. That rally was driven by multiple expansion rather than earnings growth.
Stocks that fell steeply in May have recovered. Apple (AAPL) stock, which fell ~18% due to fears of a ban in China, has recovered by 6.9% in the last three sessions, while NVIDIA (NVDA), which generates a good chunk of its revenue from China, has risen 7.5% in the last three sessions after plunging 30% in one month. However, we’re not out of the woods yet: a US-China trade deal remains uncertain, and the global economy has been showing more signs of slowing down.