-- Stocks in Asia are set to resume declines following a frenzy of dip buying that fueled a rebound in most markets across the globe on Tuesday. US futures fell in early trading.Paris Spent €1.4 Billion to Clean Up the Seine. Has It Worked?
“The Fed worries about systemic risk in financial markets, not disappointed investors,” said David Donabedian at CIBC Private Wealth US. “Thus, the Fed is unlikely to change its course of action due to a stock market correction. Are we headed for a near term recession, or are markets overreacting? We believe slower growth is unfolding, not a recession.”The S&P 500 rose to 5,240. Nvidia Corp. jumped 3.8% to lead gains in chipmakers.
While such sharp declines in equity prices are concerning, historic data show “dips, pullbacks and corrections of 10% or more” are a normal and healthy part of any bull market, according to George Smith at LPL Financial. There have been 354 such days since 1928 when the S&P 500 was down 3% or more, and the average three-month, six month and one year forward returns are all higher than long-term averages, Smith at LPL noted.
“Get used to the volatility,” said Savita Subramanian at Bank of America Corp. “The best hedge is owning high quality stocks . Market tranches based on quality have a well-behaved relationship with the VIX - the highest quality stocks tend to outperform as the VIX rises while the lowest quality stocks tend to lag the most.”
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