Why Market Optimism Faded Ended In Losses 04 April 2024

We have seen how the stock market was trading with optimism before 1.30pm (US time), yet the session ended with significant losses. NASDAQ lost 1.4%, Dow Jones was down more than 500 points. S&P 500 ended the session with negative 1.23%.

Factors That Fuel The Downturn Yesterday

There are many events happening yesterday and these factors mix has catalyse the downturn. Here are some of the significant factors hitting the market.

Federal Reserve Comments - Minneapolis Fed president Kashkari’s remarks about potential rate unchanged if inflation progress does halt. This is one key factor that catalyse the market decline.

Geopolitical Tensions - with gains in oil prices and defense stocks, a selloff was triggered after potential retaliation by Iran against Israel raise a concern. This increased geopolitical tensions in the Middle East is something that we need to watch out, as it has happen before to cause a selloff.

Though the market’s overall decline has affected many stocks, we saw some gains in defense stocks like Lockheed Martin and RTX.

Market Pullback Concerns - investors are still pondering whether the marke might be due for a due and significant pullback after we got off to a strong start in 2024.

Treasury Yields Decline After Economic Data On 04 April 2024

Initial jobless claims increased slightly while the continuing claims decreased, after the Weekly Jobless Claims which indicate a slight softening in the labour market, give investors a mixed picture. This is a contrast to earlier economic data.

Following the weaker-than-expected ISM Services PMI report, we do see some Treasury buying increasing, but yet the 10-year and 2-year notes suffered a decline. This cements the mixed picture.

Trade Deficit Widened and Natural Gas Inventories

The trade deficit widened but we saw an increase in both imports and exports indicating a rebound in global trade.

On the natural gas inventories side, we do see that it has closed to a draw which suggest that there is demand building up.

Stocks We Can Watch For 05 April 2024

$Meta Platforms, Inc.(META)$ has a stellar performance and reach a new high. This is after Jefferies prediction, suggesting that the company is poised for its best year in 2024, largely due to the potential impacts of generative artificial intelligence. This optimistic stock movement might be able to repeat today (05 April 2024)

Looking at the trade for META these 2 days, it looks like market is taking buying interest in this counter, and we could also see that MACD is trending upwards potentially.

The anticipation of the U.S. labor market's performance remains high, with expectations for the nonfarm payrolls report to reveal a strong job market. This could influence the Federal Reserve's approach to interest rate adjustments moving forward.

We could be seeing some interest rate sensitive stocks like $Berkshire Hathaway(BRK.B)$ having a nice upside when that happen. We are seeing very strong buying interest and the MACD does not seem to slow down.

Summary

I always believe that as long as we stay in the market, and not timing the market, we should be able to feel the pulse of the market. This could help us to make informed decision to find advantage when optimism suddenly disappeared.

There are still winning stocks like $Lockheed Martin(LMT)$ and $RTX Corp(RTX)$ which still saw gains even when market is suffering an overall decline.

Appreciate if you could share your thoughts in the comment section whether you think Friday economic data would turn pessimism to optimism and we shall be rewarded if we stay on course?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.