The honeymoon period of US stock market rebound has passed? Shock or become the main tone of the fourth quarter

category:Finance
 The honeymoon period of US stock market rebound has passed? Shock or become the main tone of the fourth quarter


Some analysts believe that there is no doubt that this will trigger market tension, and US stocks may be short-term correction. However, judging from the market performance, the impact of Trumps diagnosis may not be as big as expected. Although the US stocks generally fell on Friday, the decline was relatively orderly, and the decline in Asian and European stock markets was smaller. Safe haven assets such as the US dollar and gold remained basically stable, and gold fell to around 1906 after reaching a high of US $1917. If trump only diagnosed positive without other symptoms, the impact on the market will be more moderate, and the market may rebound soon.

Whats the next step for US stocks after the correction in September?

For U.S. stocks, September is the worst month since the economic recovery this year, and it is the first loss month since March. The three major indexes recorded their first monthly decline since March in September, with the Dow, the S & P 500 and the NASDAQ down 2.28%, 3.92% and 5.16% respectively, the worst September performance since 2011. Part of the reason is the collective correction triggered by technology stocks in early September. Among them, faang and other technology giants performed poorly. In September, Tesla fell nearly 14%, apple and Facebook fell more than 10%, Amazon 8%, Netflix 5.5% and Microsoft 6.7%.

Historical experience shows that September is often the worst month of the year for US stocks, while October tends to improve. According to Dow Jones market data, the Dow Jones Industrial Average has recorded positive earnings in October for seven of the past 10 years, with an average increase of 1.6%. Moreover, although the US stock index recorded a loss in September, it was relatively healthy for the overall rally. Appropriate correction released some profit plates and reduced the probability of panic selling in October.

Novel coronavirus pneumonia is still uncertain in the fourth quarter, even though investors expect the White House to launch a new round of economic stimulus measures to combat the adverse effects of the new crown pneumonia epidemic on commercial activities. In particular, the presidential election in 2020 and previous doubts about the overvalued technology stocks in the US have raised concerns that the stock market may suffer a greater impact.

Economic recovery honeymoon period has passed, concussion market may dominate the fourth quarter

The sudden correction of US stocks in September may also mean that the honeymoon period with the fastest recovery rate of the global economy has ended. The honeymoon period in which the stock market rebounded rapidly in the past few months is likely to be suspended. Before the election results come out, the trend is likely to be disorderly.

Many economists are not optimistic about the speed of economic recovery in the fourth quarter. Although the large-scale easing stimulus from governments and central banks has made the global economy recover continuously, the last stage of recovery will be the most difficult due to multiple factors. For example, differences in the U.S. Congress over the fiscal support plan will affect the pace of economic recovery. Temporary unemployment may turn into permanent unemployment while waiting for the stimulus package. Giants including Disney and Royal Dutch Shell also accelerated the pace of layoffs this week. Moreover, novel coronavirus pneumonia is spreading more rapidly with the advent of the high flu season in autumn and winter, which will force some governments to re take measures.

Earlier expectations of a V-shaped economic rebound are also disappearing as the second shock of the epidemic has re imposed some social restrictions in many European countries. Governments all over the world are faced with the problem of whether to restart the comprehensive blockade. Once again, a large-scale blockade will cause great damage to enterprises, and the decline of enterprise revenue will make them face the problem of insufficient solvency, and make loan institutions more reluctant to provide credit to companies with poor viability, which will lead to more bankruptcy of enterprises. At the same time, the longer the social isolation measures are taken, the more likely the enterprises expect consumers demand for their goods or services to decline, and it is likely to change from the temporary demand contraction to the long-term demand contraction. In this case, enterprises tend to reduce their labor costs by a large margin, resulting in further economic contraction.

Economists have been downgrading their forecasts for the fourth quarter of U.S. economic growth, fearing that the White Houses new stimulus package will stagnate and that an agreement may not be reached before the November presidential election. According to J.P. Morgan, fiscal stimulus measures by governments have increased global GDP by 3.7 percentage points this year. But if policy makers turn to tightening fiscal policy too soon, it will bring great resistance to GDP growth next year.

The surge in uncertainty has also made investors less optimistic. In September, the number of new non-agricultural employment in the United States was only 661000, which was lower than the expected increase of 875000. The former value also decreased from 1.489 million to 1.371 million. In September, novel coronavirus pneumonia also failed to reveal another level of pressure: under the two impact of the new crown pneumonia epidemic, some temporary unemployment will become permanent unemployment, and the number of permanent unemployed is increasing relative to the number of temporary and unpaid vacations. This implies that the recovery of the labor market is slowing down. Economic growth will slow down in the fourth quarter and corporate profits will also decline. We have come out of the stage from economic stagnation to rapid rebound, and now we are in a new stage that is hard to predict, and the US stock market may usher in a volatile fourth quarter, said Ethan Harris, head of global economic research at Bank of America Source of this article: Yang Bin, editor in charge of the first finance and Economics_ NF4368

The surge in uncertainty has also made investors less optimistic. In September, the number of new non-agricultural employment in the United States was only 661000, which was lower than the expected increase of 875000. The former value also decreased from 1.489 million to 1.371 million.

In September, novel coronavirus pneumonia also failed to reveal another level of pressure: under the two impact of the new crown pneumonia epidemic, some temporary unemployment will become permanent unemployment, and the number of permanent unemployed is increasing relative to the number of temporary and unpaid vacations. This implies that the recovery of the labor market is slowing down. Economic growth will slow down in the fourth quarter and corporate profits will also decline.

We have come out of the stage from economic stagnation to rapid rebound, and now we are in a new stage that is hard to predict, and the US stock market may usher in a volatile fourth quarter, said Ethan Harris, head of global economic research at Bank of America