Pre-market stocks: Americans are still sitting on tons of stimulus cash
What’s Happening: In an interview with CBS’s “Face the Nation” on Sunday, Moynihan said consumer spending topped $ 1,000 billion this year, a 20% increase from 2019 levels.
And Americans are still sitting on a lot of extra money.
“Our consumers have a lot of money in their checking accounts,” Moynihan said. “They didn’t spend about 65 [to] 70% of the last two raising rounds. “
“It appears that the situation of American households has improved following the provision of strong income transfers from the federal government,” wrote the authors of the report.
With some of that stimulus money still parked in the bank, Americans have significant financial power to fuel the economy’s ongoing resurgence.
Car rentals and hotels for leisure travel are “strong,” Moynihan said, adding that people are also starting to spend more in restaurants.
Bank of America predicts that the U.S. economy will grow 7% this year and 5.5% in 2022.
But there are a few pitfalls. If consumers spend the stimulus money they saved, it could increase the demand for goods and services beyond what the economy can provide, which would boost inflation.
Moynihan also pointed to muddled supply chains and worker shortages – issues Bell readers are very familiar with – as “key risks.”
The latest: China’s export growth was worse than expected in May, according to data released Monday, with analysts citing computer chip shortages and other supply chain issues as a factor.
Crude investors consider Iran nuclear talks as prices rise
While prices have since retreated slightly from that milestone, it still underscores the dramatic rebound in energy prices after crude plunged to unprecedented subzero in April 2020, reports my CNN Business colleague Matt Egan.
The $ 70 mark represents $ 110 a barrel above this record low. The last time the US benchmark oil contract traded above $ 70 was in October 2018.
The comeback was prompted by renewed demand for gasoline and jet fuel as the global economy comes to life. The Organization of the Petroleum Exporting Countries and Russia also continue to restrict supply, although they plan to ease production cuts in the coming months.
Brent crude futures, the global benchmark, at one point surpassed $ 72 a barrel on Monday.
The next test: Investors are watching the latest round of talks between Iran and world powers in Vienna this week. A nuclear deal could lead to an increase in supply in the market, causing prices to fall.
“If an agreement is reached, sanctions on Iranian oil exports could be lifted,” Sophie Griffiths, Oanda market analyst, told clients Monday. “However, any change is likely to be gradual.”
Meme stock mania puts Russell 2000 in the spotlight
The top-tier index – which exposed a wide range of investors to so-called memes stocks popular with online investors – has jumped 16% since the start of the year, beating the S&P 500.
The market value of Russell 2000 companies has jumped 84% over the past year to $ 3.5 trillion, index manager FTSE Russell said on Friday. The smallest company in the index is now Velocity Financial, which is worth $ 257 million. In 2020, the smallest company was Limestone Bancorp, which was valued at almost $ 95 million.
Catherine Yoshimoto, director of product management at FTSE Russell, attributed the gains to “the overall rebound in US equity markets after the COVID-19 recession in early 2020”.
But the excitement surrounding stocks itself also plays a role, drawing attention to the FTSE Russell Index’s annual rebalancing process, which takes place this month. GameStop and AMC are expected to be started from Russell 2000 due to their massive growth and join the Russell 1000 index of large companies.
Why it matters: Tons of ordinary investors have products that track the Russell indices in their portfolios or retirement accounts, which means the fate of GameStop and other big names isn’t just affecting the crowd. from Reddit. A reshuffle that shakes up these explosive but volatile stocks is worth watching.
Also today: Apple’s Global Developer Conference kicks off.
Coming tomorrow: The latest data on U.S. job openings arrives as the job market accelerates.