The day didn’t start terribly—but it sure finished that way.
The S&P 500 fell 2.4%, while the Dow Jones Industrial Average dropped 525.05 points, or 1.9%, and the Nasdaq Composite has slumped 3%.
So why did the stock market tank? Evercore’s Dennis DeBusschere notes that Fed speakers haven’t been quite as dovish as investors have hoped. That might sound ridiculous given all that the Fed has done, but it appears to true. “Yes the rates guidance is very dovish, but everyone seems to agree that rates guidance alone won’t push inflation higher,” DeBusschere writes. “Since they don’t seem interested in pushing QE at this point, USD goes up and gold goes down. Stocks go down as well. To get inflation...Fed officials are begging for fiscal.”
About that: There doesn’t seem to be any fiscal stimulus coming any time soon, and then there’s the possibility of another wave of coronavirus, as well. “Now we have a 3rd wave, zero fiscal and no kitchen sink. I.e., rates guidance is less impactful if people think inflation will never come,” writes DeBusschere.
Then there’s the election, which seems to have everyone freaked out. It’s one reason that another relief package isn’t coming, according to Morgan Stanley. “The narrative that now better fits the fact pattern, in our view, is that both parties see less risk with ‘no deal’ than a deal on the other’s terms,” writes Morgan Stanley’s Michael Zezas.
The selloff has also called into question the bull market playbook of buying tech on the dip. Though the group did well on Monday and Tuesday, it’s getting crushed on Wednesday. Economic concerns, however, have made economically sensitive cyclical stocks look scary too. For now, Wall Street seems content to sell first and ask questions later.
All this selling comes as the market celebrates the six month anniversary of its bear market low on March 23. Even with today’s losses, the S&P 500 has gained 45% since then. The folks at Bespoke Investment Group note that it's the strongest six-month rally since 2009, which also came off a bear-market low, and just the ninth time the index has gained 40% or more in a six-month period since 1933.
The good news is that the index has risen over the next 12 months in seven of the previous eight occasions—the exception being 1933, when it fell 17% over the year following the big gain.
“The declines this month haven’t been enjoyable, but let’s keep things in perspective,” Bespoke explains.
It also pays to remember where we’ve come from. After everything we’ve been through, the S&P 500 is relatively flat on the year, having advanced just 0.2%.
Knowing what we know about 2020, that doesn’t seem too bad.
Write to Ben Levisohn at Ben.Levisohn@barrons.com
"stock" - Google News
September 24, 2020 at 04:21AM
https://ift.tt/305hDo5
Why Did the Stock Market Go Down Today? The Market Really Wants Fiscal Stimulus. - Barron's
"stock" - Google News
https://ift.tt/37YwtPr
https://ift.tt/3b37xGF
Bagikan Berita Ini
0 Response to "Why Did the Stock Market Go Down Today? The Market Really Wants Fiscal Stimulus. - Barron's"
Post a Comment