There's no doubt that the US stock market has made significant gains in recent days, and this is impressive, notably after it experienced a tumultuous time in 2020. The Coronavirus pandemic really caused a stock market decline, although the markets rallied and finished on a high note by year-end. Since then, the market has made a positive turn for the better; traders have made good profits from various stocks. Bitcoin trading has been a significant highlight since 2020; yes, the digital currency has been on a steady climb since it first broke the $50,000 mark. The growing value of bitcoin has rocked the financial world, with prominent industry titans such as Elon Musk purchasing the currency.
Recently, some users of the social media platform Reddit caused the GameStop stock to rise significantly. How? This was a result of collective short squeezes by the users-against big firms. Such manipulation goes to show how much power small traders wield in the stock market. The rise in the stocks caused an uproar, which prompted the popular trading app Robinhood to restrict trading on its platform. The GameStop stock predicament caused many people in the US to be interested in the stock market, which has its pros and cons. A downside of this renewed interest in trading is: Many people began trading blindly- the result was a loss of money.
In 2021, the stock market looks promising since the economy has begun to reopen. News of Pfizer's corona vaccine has brought more good news for the stock market. Experts predict that as the country's economic output increases, the financial markets will experience a rise in stocks' value. This year, many businesses' earnings are projected to increase by over 20%- of course, this is good news for the stock market. Further, investments in the country are expected to increase significantly. The S&P will increase by nearly 15% by the end of this year since many companies have resumed operation.
Further, technology companies have the best prospects this year. However, the pandemic ran down many businesses. These businesses have begun to resume operations. The resurgence might result in their stocks rising, and many experts think they might eventually topple tech company stocks. Note that the streamlining of business operations is now the new normal. More businesses have embraced working from home, reducing the virus's spread and increasing employee productivity. Also, the desire to cut down costs has resulted in companies being more agile in conducting business.
The new way of carrying out business means more companies will perform better in the stock market. However, we must be cautious even though the future is bright; we must always make really smart investments. There are many financial risks in the stock market, and experts say the best thing anyone can do is diversify investments. Doubtless, investing in companies working in various industries will ensure a profitable portfolio.
Even though the stock market's future is bright, caution must still be applied when making investments. Investments in digital currency especially need to be made wisely. Digital currencies including Ethereum and bitcoin have recently experienced a lot of volatility. It is therefore prudent for any investor to be cautious when putting their money into these currencies. The upside of digital currencies is that they are unregulated and thus more acceptable as a payment method by many businesses. In the coming months, Bitcoin's value will continue to rise. An investor should, therefore, ensure he makes hay while the sun shines.
The Federal Reserve has implemented a few measures to increase overall spending. One is lowering interest rates for businesses as well as private citizens. More people will borrow money from banks, and this will increase spending in the country. The ripple effect of this extra spending is that more businesses will register higher sales. As more enterprises record-high sales, their performance in the stock market will also increase.
The pharmaceutical industry has the most promising prospects, especially as the vaccine rollout hits the country. Indeed, the new COVID vaccine has arrived with good news for both the financial stock market and the nation. President Biden's administration is also keen on ensuring the country's population is vaccinated. Therefore, many pharmaceutical companies will be on the frontline to ensure the vaccine's distribution is sufficient. Most company stocks will likely rise significantly.