Saturday, November 26, 2022

US tech stocks retaliated, but oversold rebound could last some time before Fed meeting

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Investors believe what US stocks are seeing now should be an oversold rally.Reuters


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Nasdaq CompositeindexThe three major US stock market indices rose together on Friday, marking their biggest gains since November 2020. Most investors believe thatamerican stockWhat is presented is an oversold rally which could continue downwards amid a monetary tightening cycle; However, US stocks may be able to take respite in the coming weeks leading up to the Federal Reserve meeting next month.

The Nasdaq continued its rally at the end of Thursday and continued to rise by 3.8% on Friday. The Philadelphia Semiconductor Index rose 5.1%, Nvidia rose 9.5%, and the TSMC ADR rose 3.3%, with the premium on Taiwan shares rising to 7.9%.

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The S&P 500 also returned to the 4,000-mark, up 2.4% on Friday; The Dow Jones Industrial Average rose 434.04 points. However, after a week, the three major indices still closed in the black. The S&P 500 and Nasdaq fell 2.4% and 2.8%, respectively, for six consecutive weeks of declines; The Dow Jones Industrial Average fell 2.1%, and closed for seven consecutive weeks, the longest decline since July of 2001.

Perhaps the most encouraging thing for tech stocks is TreasuryyieldThe ongoing rally has slowed down. US Treasury yields returned to 2.93 percent on Friday, up from 3.2 percent a week ago.

“Throughout the year, short-term returns are pushing the 10-year yield,” said Jim Paulson, chief investment strategist at The Luthold Group, noting that pressure on the interest rate market has eased as inflation expectations also stabilized in the bond market. That should help US stocks rise.

Still, investors don’t think U.S. stocks have tumbled.

Scott Radler, chief strategist at T3Live.com, said: “Does this indicate a bottom has been reached? Probably not. What we are seeing could be an oversold rally, with the S&P 500 back testing 4,100 to 4,200. Points. A bull market often has several weeks of volatility and oversold rallies in bear markets.” He expects a rally that lasts more than a week, but then the rallies will be under selling pressure.

Michael Mulaney, head of global market research at Boston Partners, believes the S&P 500 has now fallen to fair value, but the Fed’s monetary tightening cycle may see the U. The stock will fall further. Based on earnings forecast for the next year, the S&P 500’s estimated price-to-earnings ratio has fallen to 16.8 times, with Mullane forecasting it will fall to 15 times, and if bearish, the price-earnings ratio. Can drop up to 13 times. or 14 times.

T3Live.com’s Radler believes the Federal Reserve (Fed) doesn’t meet in a few weeks, and that gap gives US stocks breathing room. The biggest concern for investors right now is whether the Fed will raise interest rates too quickly and propel the economy into recession as it tries to control inflation.

Fed Chairman Powell will speak next Tuesday at a conference hosted by the Wall Street Journal. So far, the market expects the Fed to increase by 0.5 percentage points each when it meets in June and July. Powell reiterated that rhetoric on Thursday, though he also acknowledged that the Fed’s efforts to rein in inflation could inevitably strain the economy for some time.

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