Wall Street Recovery: How Will the Market React?
By The Forex Review - 27 / June / 22 386
Dominick Bell
Half an hour before the opening, the direction of futures contracts signals an opening with a modest profit in the range of 0.1% to 0.2%.
Last week, US stock markets showed a broad recovery, which seems to reflect some recovery in investor confidence.
Thus, the Dow Jones recovered by 5.5% over the past week, and the S&P 500 showed a weekly increase of 6.6%. Nasdaq recovered by 7.5% in five days, this is the best result since March.
"We really hit oversold levels when the S&P 500 dropped 24% from recent highs," one trader said.
"And as we know, oversold stocks always end up causing at least a modest rebound in stock prices," he adds.
There is some form of return of risk appetite, even if investors seem to be getting more and more used to the idea of an impending recession.
Nevertheless, many participants tell themselves that if there is a recession, it will be simply "technical" in nature, that is, characterized by a reduction in activity for only two consecutive quarters.
Investors seem especially willing to take more risk now that long bets have started to fall.
If the upward movement of stocks is not denied, then the reduction in long rates weakens slightly: after a noticeable increase at the end of last week, the bond market is tense again today, the yield of 10-year Treasuries has risen to 3.2%.
In a strategic note published this morning, Credit Suisse analysts believe that the growth of long rates is almost over and that they are approaching marginal levels in the near future.
Last Friday, the University of Michigan consumer confidence index showed a slightly less pessimistic inflation forecast for US consumers.
For some economists, this tentative improvement suggests that the urgency of the Fed's aggressive tightening of monetary policy is becoming less urgent.
As for macroeconomic indicators, according to the Ministry of Commerce, orders for durable goods increased by 0.7% in May, which is significantly higher than the market consensus forecast.
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