6 June 2020
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It was a hairy last hour on Wall Street as the Dow Jones could have done exactly what it did yesterday - but ended with its best four-year rise instead!

Wall Street passed the last-hour test with flying colours!

Peter Switzer
27 August 2015

By Peter Switzer

Before I went to sleep — yeah, I know I’m getting a little too personal — I knew what I wanted to see. It was simple. For the sake of our market going forward, we needed to see Wall Street up.

And that’s what I saw at 4:52 am when I started writing this piece. That made me a little more relaxed but the major stock market indexes in New York (the Dow, the S&P 500 and the Nasdaq) still had to negotiate the trickiest hour of all, which is the last hour.

Only yesterday, the Yanks were up over 400 points before the last 60 vital minutes on the NYSE and the Dow Jones index ended off 200 plus points!

So where was the most watched index in the world at 4:55am? Try up 370 points but, like yesterday, it had been up over 400 points. Were we in for a replay? I hoped not but we are in volatile waters and as I suggested yesterday, it looks like we’re in for this sort of thing for the next couple of months.

Why? China question marks  will persist until there is an economic or policy circuit breaker. The US Fed was once thought to be a rate riser in September but that looks like a no goer now, with the Dow off about 1500 points in a month.

There’s a lot of ‘crap’ going down worldwide  (Syria, ISIS, terrorism generally, Korea, and doomsday merchants cashing in on all this curve ball stuff ) and it’s heightening just when we approach the worse two stock market months of the year, which are September and October. These, historically, are crash months, so that’s why I expect the short-sellers and hedge fund managers of the world to cash in on this nervousness.

My morning didn’t start well when I saw European stock markets were down on “China concerns”, as media outlets put it. And at 5:06 am, the Dow was up 438 points, so my optimism that the bulls will win the day was raised but there was still 54 minutes to go and this is a crazy time for stocks.

We needed a big positive finish to make me believe that there are potentially more buyers than sellers out there, which will determine if the recent correction resumes the bull market trend or if we go back into bear market territory. I think the former but the jury is out.

What was the news that had US market players net positive overnight? Here it is:

  • The China stimulus was accepted for what it was — a start — but many know more stimulus and lower interest rates will come.
  • The central bank of China actually told us that it had released 140 billion yuan into the interbank money market to reinforce its measures of the day before.
  • Good US economic data with durable goods orders up 2.2% in July, against an expert forecast of 0.1%, which is a nice omen for the economy.
  • The New York Fed President, who’s on the Fed’s interest rate committee, said the case for a September rate rise is “less compelling” despite his positive views on the economy.

At 5:15am, I was getting excited, with the Dow up 539 points. The feeling at that point was that the bulls were taking this sucker higher!
One final point to cover. There are those who thought that maybe this bearish trend of recent times was actually the pre-rate rise correction and there could be a bit of that in all this. However, there’s certainly some China in it as well and because of the latter, the former (i.e. rate rise) looks less likely.

The world’s second biggest economy is the world’s most important demand contributor so as it weakens, it reduces world growth.

It’s great that US growth looks resilient, as the durable goods orders shows, but this Wall Street sell off, if it persists, will hurt business and consumer confidence.

This will delay the first US rate rise and push back the time we see this economy look more normal. The Yanks were most responsible for the GFC then went into recession and changed the rules on government indebtedness as well as central bank easy money, which took us a long way from what we call ‘normal’ economic times.

We need to see the world’s number one economy start to act ‘normal’ and China to show its stimulus measures are working. Until that happens, we’ll live in volatile market times.

At the close the Dow Jones was up 619.07 points, or 3.95%! Yahoo!

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