16.3 C
New York
Wednesday, May 25, 2022

Rebound: Have markets bottomed?

- Advertisement -
- Advertisement -

Once again, things are seemingly paradoxical in the stock market: the Ukraine war continues unabated, key interest rates in the US are rising again for the first time in three years, and US markets are starting its strongest rally since November 2020. Is the worst case scenario now included in the price?

Nasdaq Composite: Prices in the US technology market recover a bit (Photo: REUTERS/Jeenah Moon)

March has it all. In almost no other month are there such drastic changes in direction as in the first month of spring. It has been around 22 years since the internet bubble burst. The great financial crisis also ended 13 years ago in March. And again, it was exactly two years ago that the landslide-like coronal collapse ended.

This content comes from a third party. To see this, you must change your privacy settings.

To do this, click here.

Will there be another turning point in the capital markets these days? After all, the stock and crypto markets have been in a strong downward trend for four months, causing many tech stocks to lose 50 percent or more. The concern behind the sell-off began long before the Ukraine war, namely late last year, when the US Federal Reserve signaled a radical change in its monetary policy.

US Federal Reserve raises key interest rates for the first time in three years

In December of last year, the Fed hinted that the interest rate recovery would be surprisingly faster and longer than expected due to mounting inflationary pressure. Industry experts predict that investors will have to prepare for as many as seven interest rate hikes this year alone.

The United States Federal Reserve made the first interest rate hike last Wednesday. However, at 25 basis points, the first rate hike since 2018 was more moderate than expected months ago. However, central bank chief Jerome Powell indicated that investors would have to brace for six more hikes and a base rate level of 1.9 percent by the end of the year. At the end of 2023, the key interest rate in the US could rise to 2.9 percent.

Wall Street launches rally mode

Despite the inherent bad news (historically speaking, interest rate hikes are unfavorable for speculative investments like stocks), US stock markets reacted to the central bank meeting with almost euphoria. In fact, US stock markets posted the biggest price gains since November 2020 last week.

This content comes from a third party. To see this, you must change your privacy settings.

To do this, click here.

The S&P 500 index of the entire market is up more than 6 percent (gaining more than 1 percent for just the fifth day in a row in its history), while the Nasdaq technology stock, which entered correction mode earlier in the week , dropped five trades. days gained more than 8 percent in value. “Too many tech stocks were oversold. And at least in the short term, it looks like Wall Street isn’t going to see an immediate sell-off because commodity prices aren’t soaring higher,” market analyst Edward Moya told the New York Times of the rally.

More than a bear market rally?

Wealth manager James DePorre agrees. “Most of the upside was a combination of poor positioning, FOMO, and a short squeeze and bad news (which was priced in),” DePorre concludes.

This content comes from a third party. To see this, you must change your privacy settings.

To do this, click here.

Alone: ​​Is the comeback sustainable? During the course of the week, market commentator James Cramer quoted renowned charting technician Tom DeMark as saying that he had bottomed out. Therefore, the S&P 500 and Nasdaq 100 could be days away from a bottom, Cramer speculates.

This content comes from a third party. To see this, you must change your privacy settings.

To do this, click here.

“RIP Great Depression January 5 to March 13, 2022”

In the popular Reddit Internet forum, confidence has already returned that the drop has already been overcome. “RIP Great Depression January 5-March 13, 2022,” a joker posted on the Wall Street Bets exchange board pages. In other words, the worst would be over.

This content comes from a third party. To see this, you must change your privacy settings.

To do this, click here.

Investors will expect stock market history to repeat itself again in March: Exactly two years ago, the sell-off in the Corona crash ended with a sudden countermovement that should last more than a year. A subtle difference: At the time, the US Federal Reserve was on the side of shareholders when it cut interest rates.

Source link

- Advertisement -

New Articles