By CCN Markets: The Dow Jones bounced again on Monday, as a 250 point rally kept the positive vibes rolling…
By CCN Markets: The Dow Jones bounced again on Monday, as a 250 point rally kept the positive vibes rolling on Wall Street.
The rally continued while President Donald Trump took to Twitter in the late morning, urging the Fed to take a meat cleaver to interest rates - and making some uncharacteristically globalist comments in the process.
Heading into the early afternoon, the Dow Jones Industrial Average had jumped 262 points, or just over 1%, to 26,148.
Appetite for dip-buying remains active in equity markets, fueled by a growing belief that there will not be an escalation in the US-China trade war.
Meanwhile, Trump unleashed a remarkably globalist attack on the Federal Reserve, blaming the Jerome Powell-run central bank for harming the world economy.
It was strange to see Trump tweeting about improving the world economy, but investors would clearly love the president to have a more globalist view on economics.
With Fed Chair Powell speaking at the end of the week, expect the barrage of anti-Fed tweets to continue.
Despite the substantial rise in the Dow Jones over the last three sessions, strategists at JP Morgan are more cautious than some about this global rally in risk assets.
Lead strategist Mislav Matejka made the following comments in a note to investors reported by CNBC:
“At the overall market level, we continue with our tactical cautious stance, advocating a market pullback during August. However, we do not believe that the current pullback will extend for longer than the May one did, and still expect to step in early September, as originally envisaged.”
August is often a low liquidity month, partly because many traders are on vacation. This can cause unpredictable swings in the Dow and is probably one of the fundamentals behind JP Morgan’s view.
One of the most pro-equity headlines on Monday was news that Trump was ready to listen to Apple’s Tim Cook in regards to delaying tariffs. Unsurprisingly, this set up AAPL to be one of the leaders in the Dow, rising more than 2.4%.
Goldman Sachs was also performing strongly, bouncing 1.7% as bond yields around the world mounted a strong comeback.
United Healthcare was the only significant Dow Jones stock clearly in the red, losing 0.4% as it continues to struggle after its weak earnings in Q2. Additional gravity on UNH comes from Trump’s weak polling. A Democratic victory in 2020 raises the possibility of healthcare reform, posing a risk to large US healthcare providers.