Slight Rebound to the Stock Market Limits Losses

February 7, 2018
1518 Views

The big story of the past week has been the continued decline of major stock indexes in the United States. On February 5, the Dow Jones closed down 666 points. The next day, the market closed down 1,175 points. A lack of confidence and stock selloffs led to some of the worst stock value decreases in recent history, but then it rebound, and there is now some slightly better news for investors.

Market Rebound

At the end of Tuesday, the Dow had regained almost everything it had lost at opening in the morning, essentially putting it back to the same position.

While we haven’t seen drops this bad in a number of years, the economy is still in good shape. The fundamentals of a strong market are still in place, however, there have been some circumstances contributing to a loss of investor confidence. The record high treasury yield has played a significant part in the changes of the stock market, as investors fear that rising interest rates could limit growth.

There are some companies that are proving to be resilient in the face of a declining stock market. Amazon (NASDAQ: AMZN) is one example, and the company was up 3.8% at premarket this Wednesday. So far this year, Amazon stocks have gone up 23.38%, so it’s not all bad news for investors.

Snap Inc. (NYSE: SNAP) is another company with stocks that are performing better than expected. The company, which is famous for creating the Snapchat smartphone app, was 1.52% up at premarket on Wednesday. Although this stock is still -3.76% for the year to date, it’s still a good sign that the losing streak is over.

Some analysts have referred to recent events as “panic selling”, and believe that the market will hit a floor before recovering. If these analysts are correct, then now could be a good time for some cautious investments while values are down.

International Markets Also Losing Value

The U.S. isn’t the only country to experience stock exchange decreases. Germany and Sweden both had markets fall into correction, while the Hang Seng index in Honk Kong dropped 5.1%. Japan stocks have also taken a hit, with the Nikkei losing 4.7% in the first half of the week.

To keep things in perspective, the U.S. stock market is still up by over 6500 points since President Trump took office. World stock markets are also doing much better when looking at things over a longer period of time.

Volatility can be worrying, but it can also be an opportunity. The purchase of undervalued stocks today could lead to future gains, as long as investors are willing to take on some risk in the face of an uncertain market that can be down and rebound the same day.

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