Over 2 million people in Kuwait have received at least one dose of the vaccine against COVID-19, and half of all adults in the USA are now fully vaccinated against COVID-19. The vaccine was what the world was waiting for in order to go back to normal — and it’s working. Schools are reopening for in-person learning, restaurants and public parks have resumed, and the world is reopening for tourism. But, beyond those impacts, the COVID vaccine also had a massive impact on the global economy and the stock markets.
When drug companies Pfizer and BioNTech announced they had successfully developed COVID-19 vaccines in November, stocks worldwide surged to record highs — providing long-awaited hope to global economies about the imminent return to normal.
The benchmark S&P 500 index shot up to a record high of 3,645.99 points on Wall Street before it retreated to a gain of 1.17%. The Dow Jones Industrial Average and the heavily tech-focused Nasdaq Composite index also jumped to record highs before eventually dropping back.
The vaccine also came with some economic side effects that created volatility in the stock market. As the U.S. economy started to recover, the story was not the same around the globe. Particularly in Europe, India, and parts of South America that continued to be affected by the pandemic as vaccine rollout in those areas was much slower than in the U.S. Slower vaccine rollout means slower economic recovery on a global scale because the global economy cannot fully reopen until the majority of the population has been vaccinated.
When the FDA ordered a pause on the Johnson & Johnson vaccine, after citing reported cases of a “rare and severe” blood clot in about 7 million doses, the stock market dipped as companies worried about the potential of a surge in cases that would impact consumers’ willingness to get back to their normal spending habits. For reference, the J&J vaccine has since been cleared & authorized for usage. The White House Council of Economic Advisers Member Jared Bernstein said this shows the clear connection between controlling the virus, distributing the vaccine, and a strong and lasting economic recovery.
Volatility has been steadily declining as the S&P climbed 90% since hitting rock bottom in March of 2020. Currently, the Cboe Volatility Index — known as Wall Street’s fear gauge, hovers near a 15-month low. Factors that are helping the comeback include continued stimulus payments and expanded unemployment benefits from the Biden Administration and the Federal Reserve recently doubling down on its commitment to maintaining unprecedented monetary stimulus despite the current inflation surge.
As the global economy continues on its path to recovery, there’s an air of uncertainty fueled by the current US low mortgage interest rates, and post-pandemic shortages in a wide range of industries from lumber to rental cars.
It’s important to pay close attention to consumer trends and business practices in this post-pandemic world. There are some industries that are positioned to benefit permanently from changes that went into effect during the pandemic, including eCommerce, cloud computing, and video streaming — services that became vital to daily life during shutdowns and travel restrictions.
The bottom line is as more people get vaccinated worldwide, the economy should continue to improve as we get back to our normal lives.
As an investor, you should continue to focus on a long-term investment strategy that’s highly diversified and consistent with your risk tolerance. can provide you with a tailored investment plan with the least amount of risk and the highest reward based on your unique financial goals. Contact us today to learn more and to learn how to take charge of your financial future.