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US stock markets in decline: investor uncertainty despite solid fundamentals
According to a report from finanzmarktwelt.de, the stock markets in both the USA and Europe are in decline. The US leading index S&P 500 has already lost 10% since its peak in July and is now in a “correction”. The index is currently down around 4% in October. The VIX, an indicator of market volatility, is above 21 and stocks are poised for their worst October in five years. Uncertainty among investors is high. Although the aggressive stock market sell-off was largely driven by technical factors, fundamentals remain solid. The latest economic data, such as...
US stock markets in decline: investor uncertainty despite solid fundamentals
According to a report from finanzmarktwelt.de, the stock markets in both the USA and Europe are in decline. The US leading index S&P 500 has already lost 10% since its peak in July and is now in a “correction”. The index is currently down around 4% in October. The VIX, an indicator of market volatility, is above 21 and stocks are poised for their worst October in five years. Uncertainty among investors is high.
Although the aggressive stock market sell-off was largely driven by technical factors, fundamentals remain solid. The latest economic data, such as gross domestic product and purchasing managers' indices, have exceeded analysts' expectations. Nevertheless, skeptical corporate outlooks are weighing on investor sentiment, even though 80% of S&P 500 companies have exceeded forecasts in the current reporting season.
The downward trend in the stock market has caused many stock investors to reduce their exposure. Large investors have reduced their stock holdings to their lowest level in over a year. Hedge funds, on the other hand, have been increasing their short selling for eleven weeks in a row.
The increased volatility in the market creates further uncertainty. Both the Cboe volatility index and bond price fluctuations are making investors nervous. Additionally, investors have been disappointed by earnings season results, with companies that missed estimates coming under heavy pressure.
Despite the current gloom in the market, some strategists are optimistic and expect a year-end rally. Lower equity exposure, bullish technical signals and favorable seasonality could contribute. However, uncertainty remains high as the impact of Fed policy and inflation is still difficult to assess.
Overall, the current developments on the stock markets are worrying. The impact can be significant depending on the magnitude of the decline and the duration of the correction. Investors should review their portfolios and make adjustments as necessary to minimize potential losses.
Source: According to a report from finanzmarktwelt.de
Read the source article at finanzmarktwelt.de