April 25, 2024

UK Reverses Policy, Stocks Get Back

The UK government under the leadership of Prime Minister Liz Truss has pulled back on its planned unfunded tax cut. The stock markets have, therefore, climbed as a result. The S&P 500 index broke through the level that instigated past rallies.

Government Policy Break

The US stock index staged the recovery after it closed under the 200 weekly moving average last Friday. The Bank of America Corporation posted gains after it announced its highest net interest in the quarter. It was the highest quarterly interest the bank has seen in about ten years.

The US Treasury bond yields fell along with the Dollar. Whereas, the British Pound and bonds in the UK saw a rise.

Morgan Stanley’s stock market bear over a long time said stocks in the US are ready to have a near-term rally. This is because there is no earning capitulation and there is no recession. 

The S&P 500 loss of 25% this year made it test a serious support level. Michael Wilson said all these might potentially lead up to a technical rebound.

For Wilson, he is not going to rule out the possibility of the S&P 500 index rising above 4,150 points. That would be a 16% rise from its most recent close. Although that might seem like a really big move, it is in tandem with earlier and current bearish market rallies.

Wilson still maintained his poor long-term position on stocks. They might not have a big rally soon.

Calm Before the Storm

John Stoltzfus said a likely oversold situation in the stock market might serve as a catalyst. It would be a catalyst for average rallies before the end of the year.  John Stoltzfus is Oppenheimer’s Chief Investigative Strategist. 

Traders equally went thoroughly through the new economic reports. A measure of the New York state’s manufacturing sector contracted for the third month in a row.

The Federal Reserve’s November policy meeting is eagerly awaited. Since every data have brought upbeat returns, the market expects the Feds will raise rates by 75 basis points. Analysts say a recession is now more imminent than before. 

The Bank of England is also expected to raise rates at its coming policy meeting. Other leading central banks might then follow suit. They are all working in concerted efforts to bring down the stubbornly high inflation.

Stock markets have between now and those rate hikes to make any recovery they can. It might be all rough roads after that.

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