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After a week of recovery, the US stock market continues to remain tepid with no clear catalyst to carry the rally forward.
After a good start during the early market trade on Monday, June 27, the US stocks ended the trading day in the red. Wall Street seems to be coming once again under pressure after a major rebound last week.
The Dow Jones Industrial Average (INDEXDJX: .DJI) corrected 0.2% of 62 points by the day’s end. Similarly, the S&P 500 dropped 0.3% to 3,900.11 while the Nasdaq Composite (INDEXNASDAQ: .IXIC) lost 0.7%, falling to 11,524.55.
Wall Street investors seem to be in a state of confusion about whether the stocks have reached the bottom or are just showing a brief rebound from the oversold conditions. Some analysts also expect stocks to get a near-term relief this week. This is because investors are likely to rebalance their holdings before the end of the quarter.
Speaking to CNBC, Baird’s Ross Mayfield said that yesterday’s moves were “tepid”. He further added that the market will continue to be this way as there’s no clear catalyst for the rally to the north. Mayfield said:
“In these kind of bear market rallies, it’s more about things getting a little too oversold, a little too negative. But those aren’t enough on their own to really sustain the rally, they just can provide relief in pockets”.
However, Mayfield added that any signs of ease in the US Inflation could serve as a potential catalyst. However, the inflationary concerns seem to be far from over! Tom Tzitzouris, head of fixed income research at Strategas said:
“From here, the expectation is probably once again that we’ve hit peak inflation, even if the rollover is very slow, and that financial markets should see reduced volatility into year-end. If we see another push higher in inflation, however, all bets are off and volatility should accelerate again.”
Sector-Wise Stock Performance
On Monday, stocks from the tech and the consumer sector were the major losers with the 10-year Treasury Yield surging higher. Gaming stocks like Electronic Arts Inc (NASDAQ: EA) and Take-Two Interactive Software (NASDAQ: TTWO) were down over 3% each. In the consumer space, Best Buy tanked by more than 3.4%. The top decliner in the S&P 500 was Etsy falling 3.6% after a downgrade by Needham.
However, the energy sector was a notable gainer on Monday, up by 2.8%. In this space, Devon Energy Corporation (NYSE: DVN) advanced about 7.5% and Valero Energy climbed 8%. Shares of Marathon Oil jumped by nearly 4.9%.
Drug maker BioNTech SE (NASDAQ: BNTX) announced that its Omicron-based Covid-19 booster generates an improved immune response against the variant. Its share price jumped 7.2%.
The S&P 500 has recovered more than 7% from its 2022-low earlier this month. However, it still trades 18% down year-to-date. Some analysts believe that the S&P 500 could bottom at somewhere around 3,300 levels.