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There are several factors that are influencing the market’s run. The most prominent of them is investors’ growing optimism about a solid economic recovery this year. Also, the Biden administration has been making proactive economic decisions to help the country to recover quickly from the pandemic’s ravages. Following a $1.9 trillion rescue package, President Biden now aims to inject billions of dollars more into the economy through a sweeping infrastructure bill.
Because the Federal Reserve is maintaining its accommodative stance, consumer spending is steadily returning to pre-pandemic levels. Job growth has also been coming on strong over the past three months. Together with better-than-expected progress on the mass vaccination program, indicators of a solid economic recovery this year are strong. However, one fly in the ointment that is of concern to investors is the potential for inflation. Notably, the Consumer Price Index (CPI) rose 2.6%, year-over-year, in March this year–its highest level since 2018.
