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By Alex
Eule | Monday, May 24 To
Infinity and Beyond. It was once again a
good day to speculate on Wall Street. Look no further than Virgin
Galactic, whose shares
spiked 28% after the company completed a long-delayed
spaceflight. The test offered hope to those excited about the future of
space tourism. For Virgin Galactic investors, the test
meant the company might soon begin selling real tickets to space. The
firm founded by Richard
Branson hasn't generated any real revenue since
going public via a SPAC, or special purpose acquisition company, in
2019. Even after
the rally, Virgin Galactic shares are still down 50% from their February
peak, when investors were far more willing to bet on risky assets. The risk
tolerance has been making a bit of a comeback, though, with inflation worries
again on the back burner. The 10-year Treasury yield fell for a third
consecutive day, closing down two basis points, to 1.608%. The risk-on
day helped everything from the tech-heavy Nasdaq
Composite (+1.4%) to cryptocurrencies. Bitcoin rose 14%, to $39,000 (and change), while Ethereum was up 27%. The
value-focused Dow Jones
Industrial Average lagged behind, up 0.5%, while the
broad-based S&P 500 was up
1%. Ryan Detrick, chief
market strategist for LPL Financial, thinks the market is still catching
up with the economic reality. The economy
continues to strengthen and, so far, this year is off to a better start than
even the most bullish economist could have expected. There are
always risks though, including Covid-19 spread outside the U.S., deficit
spending, geopolitics, inflation, tax increases, and a potential policy
mistake. Not to mention, after a record 89% rally for the S&P 500, a
well-deserved break or consolidation during a historically weak time
seasonally would be perfectly normal. But, amid a
backdrop of an improving economy, massive levels of fiscal and monetary
stimulus, and rising vaccination rates, we don’t expect any pullbacks to last
very long, and we’d use any that appear as a buying opportunity. |
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DJIA: +0.54% to 34,393.98 The Hot
Stock: MGM Resorts +5.1% Best Sector:
Communication Services +1.8% |
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