You hear these terms all the time when you glance at market news. So, let's start with an analogy before we get into market jargon.
Think of an airplane. It's trying to fly and it’s trying to move forward and up, just the way one could say stock prices are trying to move higher. But there are headwinds and tailwinds. A headwind is a force pushing on the front of the plane, either moving it back or slowing it down. A tailwind is a force, coming from behind the plane, powering the plane forward.
With planes, that force is generally wind, but with markets, that force can be an economic, political or corporate development that either acts as a tailwind or a headwind.
COVID-19 was — you guessed it — a headwind. The widespread virus meant governments had to order people to stay home and businesses to close, which meant less consumer spending and more layoffs.
It seemed not much was going to reverse the headwind until a tailwind emerged that could propel stock prices.
To see the potential headwinds and tailwinds in today's market, watch the quick video above.
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