Stock investors like to foresee how the stock market trends in 2022. Despite the stellar performance of Wall Street by overcoming the effects of the pandemic for two years in 2020 and 2021, there are reasons for some skepticism. A section of market watchers has a serious concern about the rising inflation and the possibility of interest hikes by the Federal Reserve. Added to this is the coronavirus case lingering by resurging in the new variant, Omicron. Another matter of concern is the stretched valuation of the US stocks. But at the same time, there are reasons to bet on the Wall Street bulls in 2022. This article provides some valuable insights into the reasons for optimism.
Wall Street bulls can cheer because the end of the pandemic is in sight
Since Black Friday 2021, the global stock market has been experiencing high volatility as the emergence of Omicron, the new variant of the coronavirus, created new waves of global uncertainty. The variant first spotted in South Africa has been fast spreading due to its high transmissibility and making hordes of people sick. But as the virus progressed, it became clear to scientists that it lacked the sting of the earlier variants of Alpha, Delta, and Delta plus. Omicron poses no serious threat except causing flu-like symptoms with negligible fatality. Omicron is well manageable because the virus has become weak.
Scientists believe that Omicron will soon replace the Delta variant globally and become the dominant variant of the virus. Hospitalization cases will reduce significantly as home treatment and isolation should cure most people within a week. The death threat is almost non-existent because Omicron does not affect the lungs like the Delta and Delta plus variant. Scientists and the major pharmaceutical and biotech companies foresee that the pandemic will gradually enter the endemic stage and be a flu virus by 2023.
Modified vaccines to combat the new variant will further strengthen the fight against the virus. An exemplary development is the FDA recognition for the coronavirus pill, encouraging the bulls on Wall Street.
A robust US economy will boost the stock markets
As the US economic fundamentals are strong, it will be the driving force behind the stock markets. The US economy will become fully operational as the signs are clear that the pandemic will peak this winter. Many prominent money managers and investment bankers have started recasting their financial models by removing the pandemic-related adjustments.
Another silver lining is that consumer demand which is the greatest driver of GDP remains strong despite the high inflation. The consumer sentiment and consumer confidence index reflect the strong faith of fellow citizens in the US economy. The government’s infrastructure spending will make the economy stronger. The total expenditure in infrastructure in the next 5 years now stands at 1 trillion dollars, with the Biden administration signing a bipartisan infrastructure bill of $550 billion on November 15, 2021. According to the projections, up to 8 years, the spending on infrastructure can go up to $1.2 trillion.
The developments are enough to lift the spirits of Wall Street that can see good things happening in the stock markets in 2022.
The US stock markets are the best worldwide
The bulls on Wall Street review are upbeat about 2022 as they see good prospects of the US stock markets riding on the wave of the new governmental thrust on infrastructure spending. Historically, the US stock markets have always been a haven for investors, as seen after the recession of 2008. During the post-recession recovery, the value of stocks in the US markets was four times that of the rest of the world. The outstanding performance of the US stock markets in 2020 and 2021 gives enormous confidence to the bulls on Wall Street. In 2021, the S&P 500 index reached 70, an all-time high after 1995 when it peaked at 77.
The colossal size of the US economy gives the US stock markets a clear upper hand over other markets in Europe and other emerging markets. It’s another reason for the Wall Street bulls to remain bullish in 2022.
