The “losers’ parade” that began Tuesday continued marching early Wednesday as some of the most beaten-down stocks clawed back from recent weakness in a surge of pent-up investor demand. The question is whether and how long this boomerang action can continue.
Stocks with a positive early tone included Apple (AAPL), Nvidia (NVDA), and Caterpillar (CAT). These names rose in pre-market trading following a day when a couple of the big banks were up front twirling the batons. Financials, which had been smacked most of the last month, were among the best performing sectors yesterday and stayed in the green early Wednesday as well.
Global markets continued to rally, as well, on the back of yesterday’s U.S. gains, and early momentum on Wall Street looked strong. This was the first major buying interest the stock market has seen in weeks, as people mainly had stayed on the sidelines or bought Treasuries. Some investors might have taken profits from the big run-up earlier this year and retreated. The last six weeks haven’t been so much a story of people selling as people not buying, and now there seems to be pent-up demand.
The story hasn’t really changed much overnight. Hope that the Fed would ride to the rescue helped send the market to its second-best gains of the year on Tuesday, while optimism developed about U.S./China relations as the U.S. Treasury Secretary planned to meet with China’s central bank chief Wednesday. That’s the first time that key officials from the two countries have met in almost a month.
Tuesday’s surge came after Fed Chair Jerome Powell implied in a speech that the Fed would do what it has to do to protect the economy from trade turmoil.
In one possible important development, the S&P 500 Index (SPX) managed to close above the key psychological 2800 level Tuesday. We’ll see if that can hold today.
One thing that might weigh as we move ahead Wednesday is a private jobs report that came out this morning showing very…