Dow Jones December Collapse Rebounds To January Optimism
The stock market which was falling without support in the month of December seems to be reviving in the month of January.
After falling drastically until Christmas, the Dow has recovered almost 1,750 points after Christmas. In December, the market was at its worst performance, which analysts almost compared with the slide during the Great Depression.
There are various reasons cited for the recovery in the markets. The two-day talks held between the U.S. and China has set in an optimistic mood in the market, as investors expect the trade war to come to an end or become better. Both economies have suffered much from the trade war and a breakthrough is expected.
Fed Reserve head Jerome Powell has promised to wait before raising interest rates any further. There were four hikes in interest rates in 2018 and the present statement from Powell in 2019 is comforting to investors.
Job reports have shown good data for the month of December and put off fears of an immediate recession in the U.S.
China, in turn, has brought in various stimulations in its economy. It has brought down the Reserve Ratio Requirements to bring in more liquidity in the economy.
Fund flows are improving in the economy as investors are willing to be more positive in the market. The Dow which was sliding continually for three months has begun to look up. The volatile market has however brought down investor confidence as they are waiting on the sidelines with more cash in their hands.
Many analysts had given comparative write-ups where the downslide was connected with the recession of 2008.
Amid the gloom and doom in the market, Dow saw a huge rally on Friday. About 95 percent of the volume was in the advancing stocks. This has occurred previous thrice in 1982, 1987 and 2011, according to data from SentimenTrader.com. However, the S&P faces stiff resistance ahead.