Tuesday, 28 March 2017

Markets fall but S&P 500's long-term momentum “still very solid”

Markets fell on Monday.

The S&P 500 fell 0.1 percent, the STOXX Europe 600 fell 0.4 percent and the Nikkei 225 plunged 1.4 percent.

“Equity valuations have been underpinned by the Trump reflation trade since November, but the failure of the health-care bill raises major doubts about the strength of the administration and risks unwinding all the gains that the market has seen over the past five months,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

The S&P 500 did recover from a much deeper decline on Monday, with Patti Domm at CNBC attributing it to end-of-quarter buying.

Domm also reported that according to Sam Stovall, chief investment strategist at CFRA, April is on average the second best month of the year for the S&P 500.

Beyond that, technical analyst Katie Stockton said on CNBC on Monday that the long-term momentum of the market “is still very solid”.

Monday, 27 March 2017

S&P 500 expected to survive Trump's health-care failure

The S&P 500 fell 1.4 percent last week. It slipped 0.1 percent on Friday after President Donald Trump failed to secure enough votes to pass his health-care bill.

However, Patti Domm at CNBC wrote on Friday that the market is likely to shrug off the health-care debacle.

“The market is expected to quickly move past the fallout from the House's failure to vote on a plan to replace Obamacare, and watch the play by play on President Donald Trump's promise to start work on reducing corporate and individual taxes,” she wrote.

“If they can get past this and move on to Trump's other programs, the market will breathe a sigh of relief,” Art Hogan, chief market strategist with Wunderlich Securities, was quoted as saying.

“I don't think it necessarily spells doom and gloom for the rest of the pro-growth agenda,” said Tom Simons, money market economist at Jefferies.

“If the president didn't deliver 100 percent, you were bound to get some kind of insecurity in the stock market, but I think what people are forgetting is the underlying fundamentals are still there, and that's what's going to drive the stock market,” said Richard Bernstein, CEO of Richard Bernstein Capital Management.

Writing at Forbes, Tom Aspray agrees.

Aspray said that “the stock market is not on ice that is thin enough to indicate a new bear market” and “I expect stocks to survive Trump's big legislative failure”, but added that “a further correction is now more likely”.

Saturday, 25 March 2017

US stocks fall with Trump's health-care bill

Markets were mixed on Friday.

The S&P 500 slipped 0.1 percent, the STOXX Europe 600 fell 0.2 percent but the Nikkei 225 rose 0.6 percent.

US stocks fell after President Donald Trump failed to secure enough votes to pass his health-care bill.

Kate Warne, investment strategist at Edward Jones, said the “inability of the Congress to pass the health-care bill would send a signal that other policies, such as tax reforms may be delayed too.”

Friday, 24 March 2017

Markets mixed, US stocks in “consolidation phase”

Markets were mixed on Thursday.

The S&P 500 slipped 0.1 percent but the STOXX Europe 600 rose 0.9 percent and the Nikkei 225 rose 0.2 percent.

“We think this is a normal pullback and consolidation phase after everything that's happened over the past six months,” said Lisa Kopp, head of traditional investments at US Bank Wealth Management. “The economic data seems to be positive; that's why we are still positive on stocks for the year.”

However, Canaccord Genuity chief market strategist Tony Dwyer thinks that it is not time to buy.

Speaking to CNBC on Wednesday, Dwyer said that “we just want to be market neutral until those things get oversold enough”.

And on Thursday, Todd Gordon of TradingAnalysis.com told CNBC: “The underperformance of the small caps over the last two months coupled with a significant reversal in the Nasdaq makes me very cautious of this market going forward.”

Thursday, 23 March 2017

Markets mixed as US stocks rebound

Markets were mixed on Wednesday.

The S&P 500 rose 0.2 percent but the STOXX Europe 600 fell 0.4 percent and the Nikkei 225 plunged 2.1 percent.

“My feeling is we are running into a period of risk-off sentiment,” said Christoffer Moltke-Leth, director of global sales trading at Saxo Capital Markets.

Nevertheless, the rebound in the US kept some analysts optimistic.

“The market’s decline was relatively short-lived and economic data are amazingly strong, so we are still in a bull market and view this as a buying opportunity,” said Randy Frederick, managing director of Trading & Derivatives at Schwab Center for Financial Research.

In contrast, Kathleen Brooks, research director at City Index, wrote in a note that “the market is sending us some signals that could suggest a deeper pullback is on its way”.

Wednesday, 22 March 2017

Markets fall but investors “not throwing in the towel”

Markets fell on Tuesday.

The S&P 500 fell 1.2 percent, its steepest fall since 11 October. The Dow Jones Industrial Average and Nasdaq Composite fell 1.1 percent and 1.8 percent respectively, their worst declines since September.

Elsewhere, the STOXX Europe 600 fell 0.5 percent and the Nikkei 225 fell 0.3 percent although most other Asian markets rose.

Jack Ablin, chief investment officer at BMO Private Bank, said that investors have lost some of their enthusiasm over President Donald Trump as “a lot of his policies got mired in the legislative process”.

Nevertheless, analysts appear to remain sanguine about stocks.

“Investors are not throwing in the towel but they are resetting their expectations,” said Ablin.

“This doesn’t feel like a selloff, though, at least not at this point,” said Steve Sosnick, equity-risk manager at Timber Hill/Interactive Brokers Group.

A recent survey of global fund managers by Bank of America Merrill Lynch showed that most respondents thought that higher interest rates will be the most likely catalyst to end the bull market but for now, Treasury yields remain too low to hurt stocks.