Stock Markets Gain on the Day
By Laif Meidell, CMT, president of American Wealth Management, and portfolio manager of the AdvisorShares Meidell Tactical Advantage ETF (MATH)
After watching intraday stock gains evaporate by the market close the past two days, investors feared the same fate for the stock market on Wednesday as U.S. stocks rose at the open then drifted lower during the first three hours of the trading day. The morning’s waves of selling were replaced at mid-day with persistent buying enthusiasm that continued up to the closing bell.
The Standard and Poor’s 500 finished that day higher by 3.9 percent and the Nasdaq Composite rose 4.24 percent on the day.
There was no immediate response in the stock market to comments by Federal Reserve Bank of New York President William Dudley who said, “International developments have increased the downside risk to U.S. economic growth somewhat,” therefore the need to raise interest rates in September was now “less compelling to me than it was a few weeks ago.”
Those sectors that experienced the greatest rebound on Wednesday were the Dow Jones U.S. Technology index up 5.06 percent followed by the Dow Jones U.S. Healthcare index gaining 4.18 percent on the day. Conversely, dividend paying sectors such as utilities underperformed as interest rates rose.
Due in part to its 6.02 percent rebound on Wednesday, this week’s top performing country is Turkey with the MSCI Turkey Investable Market index slightly lower by 0.49 percent over the past five trading days. Some of the hardest hit countries by the global stock market’s recent decline have been in the Asia Pacific region. However, following the stock market’s rebound on Tuesday, many of these countries held on to their gains while adding to them during Wednesday’s rally. Though still in negative territory over the past week, this week’s top performing countries include Taiwan, South Korea, and Malaysia.
The stock market is now in the process of unwinding its extremely oversold condition. The goal of the stock market at this point will be to convince investors that the storm has passed and that the coast is clear. However, if the major indices are not able to close above and resume their longer term trends higher in the process, then we may be facing more rough waters in the months ahead.
This commentary originally published in the Reno Gazette-Journal. Performance numbers used in this article were obtained through eSignal and are not guaranteed to be accurate.