(CercleFinance.com) – After having lined up seven consecutive weeks of decline, Wall Street should open higher on Monday morning, the rating benefiting from modest purchases on the cheap in a market that is still as cautious as ever.
Half an hour before the opening, the ‘futures’ contracts on the major New York indices are advancing between 0.8% and 1%, announcing a recovery in the trend in the first trades.
Following another difficult week, where the indices suffered in particular from the difficulties of mass distribution, a bargain-hunting movement should take place, but without much conviction.
The S&P 500 index briefly entered ‘bear market’ territory on Friday, a figure marked by a drop of more than 20% from its recent highs.
After this kind of massive sell-off, bargain hunters tend to pop up looking for oversold stocks.
In the absence of significant news or major indicators, investors should be sensitive to valuation issues and focus on stocks that have fallen the most.
‘Many companies are now posting results well above those of before the pandemic, while their stock markets are evolving at levels close to or below those of 2019’, we argue at Raymond James.
For Edward Jones strategists, the recent episode of volatility could harbor some buying opportunities.
‘Predicting market lows (or highs) is well known to be a perilous exercise, but with valuations down close to 25% and the scenario of a recession now looking well priced in by markets, the risk/return profile appears more favorable at current levels (even potentially generating good surprises)’, underlines the asset manager.
A sign of the better disposition of investors, the CBOE’s VIX volatility index, a barometer of investor anxiety, is back below the 30 point mark supposed to illustrate ‘nervous’ markets.
On the bond market, government bonds fell by a pendulum effect with the equity markets, with the yield on 10-year paper rising to more than 2.84%.
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