Source: Jin10 Data
After a severe global market sell-off, investors face the dilemma of whether to buy low. Economic concerns in the United States and disappointing financial reports from technology companies may signify further losses.
As the new week of trading is about to begin, the market crash brings a dilemma. In the past two years, investors have jumped into the stock market when it was weak and received returns. The S&P 500 index has climbed about 50% from its low point in October 2022. Product structure, 10-30 billion yuan products operating income of 401/1288/60 million yuan respectively.
However, if last week's worrying US economic data leads to growing concerns about recession, bargain-hunting investors may be crushed.
The legendary investor Warren Buffett's financial report released on Saturday may also give 'bargain-hunters' pause: the conglomerate sold off about half of its portfolio of stocks, and watched its Q2 cash reserves soar to $277 billion. In the absence of finding a whole business or individual stocks that can be bought at reasonable prices, Berkshire often lets cash pile up.$Berkshire Hathaway-A (BRK.A.US)$/$Berkshire Hathaway-B (BRK.B.US)$$Apple (AAPL.US)$
This year, AI technology and the so-called 'Goldilocks economy' have stimulated the rise of the stock market. In the 'Goldilocks economy', economic growth remains resilient while inflation cools down.
In the past week, market risk appetite was hit. Fearing that the Federal Reserve waited too long to cut interest rates could damage economic growth, traders sold stocks ranging from overvalued chip makers to industrial companies and turned to safe havens such as US government bonds.
Disappointing earnings reports from tech companies have compounded concerns in the market about overvalued stocks.
At the same time,$Amazon (AMZN.US)$,$Alphabet-A (GOOGL.US)$/$Alphabet-C (GOOG.US)$And.$Intel (INTC.US)$
However, some investors believe that the recent crash is just a pause in the strong market of the year, and they are looking for opportunities to buy.
Villere & Co. portfolio manager Lamar Villere said 'We've been looking for opportunities to enter some high-priced stocks, but are struggling to find any opportunities right now.'
The year-to-date gains of the S&P 500 and the Nasdaq index are both around 12%, even with the recent plunge. Chip makers' rapid rise has become a symbol of the AI boom, and although their stock prices have fallen by more than 20% from their high point, their gains since the beginning of the year have reached as high as 117%.$NVIDIA (NVDA.US)$
Economists have pointed out bright spots in Friday's job report, including large increases in labor force for a second consecutive month. Some have also said that Hurricane Berriel's assault on the Gulf Coast last month may have affected the statistical data.
Although expectations for the performance of tech companies may be high, some heavyweight companies have demonstrated strong profitability, including Apple and Facebook's parent company, which 'continue to have great businesses, huge competitive moats, and strong cash flows,' said Michael Arone, chief investment strategist at State Street Global Advisors. 'Investors often overreact in the short term.'$Meta Platforms (META.US)$.
According to LSEG Datastream, last week's expected P/E ratio of the S&P 500 index was 20.8 times, lower than the 21.7 times in mid-July, but still higher than the long-term average of 15.7 times. If there are more bad news, this may further prepare stocks for sale.
B. Riley Wealth's Chief Market Strategist, Art Hogan, said, "This is not a category three hurricane, but we're seeing a market reaction to the normalization of the economy after the heat up in the first half of the year. The market will find itself overreacting, and investors will grab any excuse to take profits."
Before the consumer price report is released on August 14th, there is no major economic data to be released, which may keep the market tense. In fact, concerns about economic growth have made traders more panic than in the past few months.
The CBOE Volatility Index, known as Wall Street's "Fear Gauge",$CBOE Volatility S&P 500 Index (.VIX.US)$rose to a new high since March 2023 on Friday, as demand for options protection against stock market decline surged.
At the same time, the benchmark 10-year US Treasury yield, which moves inversely to bond prices, fell nearly 40 basis points this week, marking the largest weekly drop since March 2020, as investors priced in a rate cut and sought to avoid future volatility.
Michael Farr, President and CEO of Farr, Miller & Washington, said, "This is a huge shift." It definitely looks like a fear trade is in place.
Editor / jayden