this one after anotherhuge market rallies Last week’s date may seem like a distant memory to investors, after stocks tumbled for the past four days of losses on Tuesday.
The Dow ended their losing streak by rising more than 35 points, or 0.1%. It was a tumultuous trading session with the Dow gaining more than 400 points at one point and dropping by around 130 points earlier in the day.
The S&P 500 and Nasdaq ended the day lower after briefly entering positive territory in midday trading. The S&P 500 fell 0.7% and the tech-heavy Nasdaq fell 1.1%. The red for both indices was the fifth day in a row.
There was little news to justify the seesaw move in stocks. No major companies reported earnings, and no major economic reports.
concerns about inflation – and even more likely to happen larger rate hikes From the Federal Reserve – scaring and sending Wall Street back long-term bond yields higher.
recession fears has back with vengeance After JPMorgan Chase’s harsh comments on the global economy
(JPM) CEO Jamie Dimon and International Monetary Fund in the last two days.
Anxiety is at a fever pitch like big American companies prepare to report earnings It can give you an idea of what to expect for the third quarter and maybe for the fourth quarter and 2023.
The continued rise of the US dollar may reduce the profits of multinational blue chip companies. And few see an end in sight to the dollar rally.
UBS Asset Management strategists Evan Brown and Lucas Kawa said: “Federal Reserve policy will continue to support the US dollar, as tightening will continue without a pivot to easing until tangible evidence of labor market weakness emerges or inflation is much closer to target.” Said. and report on Tuesday.
Therefore, it makes sense to wonder if the market still has more room to fall before finally hitting the much-promised, but seemingly difficult, bottom. this S&P 500 and Nasdaq both hit new 52-week lows on Tuesday and Dow not far from either.
But investors shouldn’t brazenly ignore the big swings in the market over the past week, even as the bears seem to be under control.
History shows when stocks Enjoy gains as dramatic as those from last Monday and Tuesday, this could be a sign that a bear market bottom may be imminent. The S&P 500 rose 5.7% in those two days.
by chirp According to Liz Ann Sonders, chief investment strategist at Charles Schwab, who shows data going back to 1960, the S&P 500 was higher six months later, eleven days after the fourteen days that followed the days when the S&P 500 rallied over 2.5% in succession. .
This included three examples from late 2008, when market volatility was at its peak during the Global Financial Crisis.
Another report from Bespoke Investment Group shows stocks doing even better in 12 months after two big bullish days. The S&P 500 is up about 15% in a year after back-to-back major rallies, but only compared to normal historical gains of 9%.
Still, the big fluctuations in the market show how nervous investors are. this CNN Job Fear and Greed Indexfacing the VIX
(VIX) The volatility indicator and six other measures of market sentiment are at Extreme Fear levels.
But when investors are universally this bleak, it often presents good long-term buying opportunities.
Louis Navellier, president of Navellier & Associates, said in a report that last week’s market boom was partly due to bearish investors rushing to buy stocks to close open positions or bets that the market would fall.
“The short rally we saw in the first two days of October is very important. Short-term rallies are how the markets turn upside down,” he said, noting that stocks have “gone from oversold to a little overbought in the past week.”
Therefore, it is not a big surprise to see the market slackening and returning some of the gains made earlier last week. But it’s also worth noting that despite recent losses, the S&P 500 is still slightly higher than where it closed on September 30. In other words, it would be best for investors to sit tight.
Indrani De, head of global investment research at FTSE Russell, warns that investors should not overreact to day-to-day market movements. If you’re constantly trying to only buy when you think the market is bottoming out and sell when things look bleak, you might miss out on rallies like last week.
De acknowledged that “in times of high economic uncertainty … markets will remain in a regime of high volatility”. But he urged investors to break through the bumps.
“It’s not about the timing of the market,” De said. “The time has come in the market. This is very important.”
Leave a Comment