Stock Market Rebounds After Days of Negative Volatility

Published on: 29 Mar, 2018

Stock markets in the United States suffered one of their worst performing weeks during the third week of March. The US Stock market, if measured by Standard & Poor 500, and Dow Jones Industrial Average, went down by six percent. In contrast, the international equities dipped four percent. This sell-off was a result of fears of the United States being embroiled in a trade war.

Although the markets have regained some of their composure, the S&P 500 and Dow continued to remain much below their respective levels. These continued even after Trump made a series of announcements which proclaimed tariffs to be placed against China during the middle of March. The markets are yet to get back to where they rose in 2018.

It seems that the worst period has passed for now. The stock markets are now inching up. The Dow continued its upward swing for two days, moving up 170 points on March 27. The Standard & Poor 500 went up five points. The Dow touched 24,377. The S&P went to settle at 2,660. As expected, President Donald J. Trump of the United States were exultant on Social Media. He was characteristically quiet at the time when the US stock market crashed. The president has reason to be happy. The S&P achieved its best day from 2015. It went up by 2.7 percent as China wanted to purchase a larger number of semi-conductors. Beijing offered this deal to reduce China's trade surplus. Analysts believe that China did this move to avert a full on trade war.

Many analysts regard this downward state as an excellent buying opportunity. Dubravko Lakos-Bujas, an equity strategist at JP Morgan, concurs. He said that the market seems to overreacting to the sequential negative narratives like rising deficits, inflation scares and rising yields among others. He assured investors that strong fundamentals mean the markets will eventually go north. A few investors have already latched on to the opportunity. Bank of America has reported that its clients have purchased about three billion dollars' worth of equity.

Retail investors, however continued to be wary of the market's volatility. A survey of sentiments of the American consumer found that about six percent of investors believe the US stock market can only move up in 2019. It is to be mentioned that the survey was made prior to Trump formally announcing the administration's anti-China tariffs.

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Danny Abramov

Email: danny@financialinsiders.com

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