Still, as has been the case in the past few weeks of trading, volume was nothing to write home about. (See below.)
The market is just in an oversold condition. I think you saw the start of this [comeback] on Friday," said Ray Hawkins, vice president of block trading at J.P. Morgan. "There is some pressure off the sell side; it's not really much of a surprise that you would see it up today." Hawkins said some of the flurry could be due to end-of-the month portfolio adjustments but also mentioned that volume is low as many hang back ahead of the economic data due out later this week.
Investors will pay close attention to that end-of the-week stream of data, including the Purchasing Managers' Index (definition | chart | source) , retail sales (definition | chart | source) , new home sales (definition | chart | source) and the employment report (definition | chart | source) , for clues to what the Fed will do next. Today, the Conference Board reported that its Consumer Confidence Index hopped nearly 7 points, to a four-month high of 144.4 after declining for three months. The reading suggests most Americans have not yet felt the pain of the recent series of interest-rate hikes.
Indeed, many market watchers think the Fed is far from finished with its series of rate hikes as it tries to rein in the economy. "The economy is extraordinarily strong. The Fed will keep raising rates as far and as long as it takes to knock the market down," said Charles Blood, director of financial markets strategy at Brown Brothers Harriman. Despite the Fed's insistence that it is not targeting the stock market, the economy is being sustained by the market, he said.
Even with the recent dips, stocks have not given back enough, Blood said. "The Nasdaq is only back to where it was last November."
Furthermore, Blood said the firm's longer-term view continues to be "very bearish," saying it expects the S&P 500 to drop 30%, measured from its peak, with probably a further 20% to 25% to go from its current levels. The Dow is seen dropping by similar percentages, while the Nasdaq is seen falling further down than the other proxies, said Blood. |
