Abstract: For two consecutive days, US stocks have risen sharply. Is the reason related to Trump ? So can this wave of rise continue?
[Yi Niu Finance] News: Since September, the US stock market has entered a plunge mode and has fallen into a technical bear market. Just around Christmas, US stocks fell by more than 2%, which can be said to be the "worst Christmas". However, things seem to have changed in the past two days. Not only did the US stock market rebound, it also achieved the largest single-day increase. So, is this current wave of upsurge or a Jedi counterattack? Can it continue?
US stocks rebounded
On Thursday, US stocks opened low, the Dow Jones Industrial Average fell by more than 330 points, and the Nasdaq fell by more than 100 points. Within 50 minutes of opening, the Dow Jones Industrial Average fell 500 points, erasing half of yesterday's 1,000-point increase. In the afternoon, the decline of US stocks expanded again: the Dow Jones Industrial Average fell by 611 points, down more than 2.6%; the S&P 500 index fell 70 points or 2.8%, falling below the 2400 point mark again; the Nasdaq fell 210 points or 3.3%.
However, just 15 minutes before the closing, the three major indexes rose collectively. As of the close, the S&P 500 closed up 21.13 points, or 0.86%, to 2488.83 points, recording its biggest intraday reversal since 2010; the Dow Jones Industrial Average closed up 260.37 points, or 1.14%, to 23138.83 points; the Nasdaq Comprehensive index closed up 25.14 points, or 0.38%, to 6579.49 points.
It is worth mentioning that just on the previous trading day, the US stock market also hit the largest single-day increase in history. As of the close of the day, the S&P 500 closed up 116.60 points, or 4.96%, to 2467.71 points; the Dow Jones Industrial Average closed up 1086.25 points, or 4.98%, to 22878.45 points; the Nasdaq closed up 361.44 points, or 5.84%, to 6554.35 points.
The reason is related to Trump?
Some people say it is Trump's "credit" for the sharp rise in US stocks in the past two days.
Just during the Christmas market closure, Trump once said that American companies are the best in the world and now is a great opportunity to buy stocks, calling for investment in the US stock market. At the same time, Trump is also publicly criticizing the Fed for saying it has raised interest rates too quickly.
However, Hassett, chairman of the White House Economic Advisory Committee, said that the fundamentals of the U.S. economy will be very positive, and the work of Federal Reserve Chairman Powell and U.S. Treasury Secretary Mnuchin will not be threatened "100%".
Financial Blog Zero Hedging Analysis said that US corporate pension funds may buy US$64 billion in stocks may be one of the reasons for this rebound in US stocks. According to Wells Fargo calculations, due to the need for a large-scale rebalancing adjustment at the end of the quarter, U.S. corporate pensions need to increase their stock portfolio by $64 billion by the end of the year.
. May the sharp rise of US stocks be difficult to sustain?
Since the US stock market has risen again, can this wave of big rise continue? Based on the views of many institutions, since the two major supporting factors of valuation expansion and liquidity expansion will no longer exist, U.S. stocks will mostly fluctuate in range next year, and there is no possibility of a unilateral rise.
First, in terms of liquidity, the Federal Reserve will continue to tighten monetary policy; second, in terms of profitability, US companies may face more adverse factors next year, which will put pressure on corporate profits.
senior macro trader Yuan Yuwei said that the rebound of the US stock market was due to the extreme oversold short-term short-term. After the strong support level short positions closed plus long pallets. Both long and short sides want to make the performance at the end of the year better, which led to a surge in US stocks, but most of them will be volatile next year. To put it bluntly, the current stock market fluctuations are more based on fear rather than fundamentals.
In other words, with the prospect of continued interest rate hikes in the Federal Reserve, weakening fiscal stimulus and peaking earnings, the short-term surge in US stocks is difficult to sustain.
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