Wall Street, the ‘bull’ longest in history has come to an end? – DiariodelWeb.it

NEW YORK (askanews) – The market “bull” the longest history in stocks in the United States is likely to come to an end? And ‘This is the question circulating among traders, managers, analysts and investors from overseas. The rally from six years starring indexes on Wall Street is threatened by fears of a slowdown in China and as a result to a global economic slowdown. Those fears yesterday caused a significant sell-off that took the Dow Jones, Nasdaq and the Russell 2000 in the territory technician “correction” , which is reached when an asset class suffers a drop in at least 10% from its recent highs.

To understand the scope of sales that hit the American markets, in the wake of what was experienced by the Asian markets in the European ones, just a number: 1,100 are the billions of capitalization went up in smoke in the last five days of trading on the S & amp; P 500. And for the index of 30 blue chip week was the worst since the last financial crisis in terms of points and the worst since 2011 in percentage terms . The 1,017.85 points, 5.8%, left on the ground from Monday to yesterday compared respectively with 1874.19, the 18%, lost in the eighth ended on 10 October 2008 (after the collapse of Lehman Brothers occurred the previous month) and with the -6.4% recorded in the week ended September 23, 2011, when it was feared a recession for Europe “double-dip” (when the economy contracts after one or two quarters of growth).

In the coming days investors will have to decide whether sales is representing just a break or the beginning of hard times for the global economy and consequently for equity markets . In a note to clients Dwight Johnston, Dwight Johnston Economics, pointed out that a sell-off in late summer is not unusual. In that of 2012, the US stock is tripped due to the debt crisis in Europe, but then that event-the US was not digested and lists kept running for the rest of the year. If it is a long term trend, “look to the Asian financial crisis of 1998. That crisis devastated the economies of the region and triggered a rally of striking Treasury. But the US economy was strong and the devastation in Asia barely hit the US economy for one or two quarters, “.

Looking forward to understand the market direction, the caution will prevail. Because the overall uncertainty complicates the plans of the Federal Reserve to start the normalization of its monetary policy, which is accommodating since December 2008 that when he brought the interest rates at historically low levels equal to 0-0.25%. According to the Fed Funds futures, the odds of a close next month were 28% yesterday against 50% at the beginning of the week. It ‘a sign that traders are betting the central bank in a patient. But the demonstration of a further patience by the US central bank could prompt investors to be even more worried about a slowdown in the global economy. At the same time, however, what would be the first rate hike since 2006 according to some could slow economic activity, food an outflow of capital from emerging markets and unnerve investors themselves.

Meanwhile, strategists, dust off the “Dow Theory” . Mentioned for the first time by Charles Dow in 1900 and 1902, the theory is simple. The direction of the economy is linked to the direction of the two indexes, the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA). The first is composed of companies that produce things, the second from those which move them. Depending on how the production and transportation of things, the two indices will move in tandem. Regardless of the direction, they are launching a signal to investors. If the DJTA, those signals are clear for some time: the index is losing share since the peak last December 29 at an altitude of 9,217 and even before yesterday’s session was in correction. In contrast, the DJIA had gained ground for most of 2015 reaching a record on May 19 last year but yesterday is in turn joined correction. Why some interpret such convergence as a signal for “sell” , sell.

But others, like Andrew M. Brooks, vice president and head of trading dell’azionario of Use T. Rowe Price Group, believe that the sell-off is positive for the feedback (in some cases too swollen), giving investors a chance to bet sull’azionario at attractive levels. As explained to the Wall Street Journal, “Investors should remember that corporate balance sheets are good and that the activities of M & A continues,” . But Brooks acknowledges that that yesterday was a “bad seat”.

Here’s the recap.

The DJIA suffered a crash of 530, 94 points, 3.1%, to 16,459.75. On the bottom of the 30 blue chips was Apple (-6.12% to 105.76 US dollars): the title of the manufacturer of the iPhone has entered the territory called “bear” having lost 20% from its last top.

The S & amp; P 500 surrendered 64.84 points, 3.2%, to 1,970.89 with the technology industry who won the black mesh (-3.82%). To understand the intensity of the sales note that only 10 of the 500 stocks in the index closed yesterday rising. Among them there were the software vendor Salesforce (+ 1.96%) and Hewlett-Packard (+ 0.44%) following the quarterly results.

The Nasdaq Composite Index lost 171.45 points , 3.5%, to 4706.04. For the index of 30 blue chip and the benchmark was the biggest daily drop since November 2011; in both cases the bending weekly was 5.8%. For the basket technology, the contraction in 5 trading days was 6.8%, the largest since August 2011.

The oil in October ended down 2.1% at 40 , $ 45 a barrel but during fell below 40 dollars a barrel for the first time since 2009. The WTI ended the eighth consecutive week of decline (-4.8%), the strip longer time since 1986.

The race for assets considered retreat led investors to buy Treasuries. The decade was up 10/32 with yields, which move inversely to prices, down to 2.052% from 2.084% on Thursday. It ‘been so reached the lowest level of last April, when the yield was traveling below 2%.

The gold rose 0.6% to $ 1,159.6 an ounce, the highest July 2. Although it was discovered, the precious metal will return to lose altitude (only 24 last July had reached the minimum five years) when the Fed will begin to tighten their belts. And ‘what investors are willing to bet.