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Powell's Presser and Earnings Galore: A Market on Edge
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Our View
There were some decent rallies to sell yesterday but buyers showed up again for a few reasons: 1. after a big drop, there is often a tendency to rally, 2. thin to win, and 3. foreign money is still moving into the U.S., with investors buying dollars.
I don’t think Monday’s drop was the end of the world, but it clearly cast doubt about the cost and development of AI. We live in a highly competitive and evolving world, and Monday’s decline proved that point. Will NVIDIA regain the $800 billion in market cap it lost? I don’t know, but if it does, it won’t happen overnight. Will the ES and NQ recoup their losses? I think so, but it’s going to take time.
What Monday’s selloff did was create doubt in what has been the hallmark of the almighty “Magnificent 7” or 10 which in itself is a problem. As I’ve often said, the S&P 500 doesn’t like uncertainty and losing $1 trillion in market cap in a single day doesn’t do anything to instill traders’ confidence.
2 PM today is the first FOMC rate announcement of the year widely expected to be a non-event with a no-change position, but watch the clock. There will be a presser.