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29Nov2018

Stock Market Jumps After Volatility

By Selina Stoller, Summit Consumer Receivables Acquisitions, LLC ***

After a few weeks of volatility, the stock market rebounded thanks to a strong start to holiday shopping. But is this really a short-term bounce or a signal for a sharp drop on Wall Street?

The much-anticipated boost came after sellers sliced nearly 2,000 points off the Dow Jones industrial average over the past 10 days.

Last week, U.S. stocks closed sharply on Wall Street as the Dow Jones dropped, pulled down by more steep losses in big technology companies. Apple, Microsoft, and Facebook all came under heavy selling pressure while industrial companies also took a beating.

But professional investors are still skittish and not ready to declare “all clear” just yet.

The mood among investors remains cautious despite the 350-point, 1.5 percent, advance on Monday for the blue-chip Dow average. Online Cyber Monday sales jumped more than 18 percent compared to last year’s $7.8 billion, building on strong results from Thanksgiving and Black Friday.

This lingering skepticism is no surprise. Eight of the Dow’s 15 biggest daily points gains in history have come in bear markets or stretches where the broad market was down more than 20 percent.

The answer is still unclear if this jump is a bounce or bottom. Market skeptics warn the fall of once-high soaring tech stocks, the trade disagreements between the U.S. and China, and the Federal Reserve’s interest rate hikes could prove for a short-term rebound.

There are also reasons for hope.

A potential positive sign is that shares of automakers and homebuilders – which had been severely punished by investors – have done better than other parts of the stock market in recent days. This is a likely early sign that some downtrends are exhausted among stocks that got hit first in the current correction.

Some investors say that stocks could get a lift if the Federal Reserve backs off its aggressive interest rate stance or if Wall Street Analysts turn out to be too pessimistic about the slowdown in corporate earnings. Analysts will also be watching President Trump’s summit with China’s President Xi Jinping on trade at the G20 meeting.

  • 29 Nov, 2018
  • Summit Consumer Receivables Acquisitions, LLC

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