DJIA -249.52 (-1.36%)
No, that isn’t all.
After Monday’s rally, which saw the Dow Jones Industrial Average pick up 240 points on the day, many figured the selloff was already over. Yet, U.S. stocks are selling off again sharply on Tuesday amid bothersome questions about stock valuations, central-bank limitations, and the state of the economy that were not erased by one dovish speech by a Fed official.
“Many were worried Friday was setting up a third ‘tantrum,’ ” noted Liz Ann Sonders, the chief investment strategist at Charles Schwab, “the first being the ‘taper tantrum’ in 2013, and the second being the tantrum which followed the Federal Reserve’s initial rate hike last December. Monday’s action eased those concerns…for now.”
The one-day rally – and the dovish speech from the Fed’s Lael Brainard – did indeed ease those fears. “It seems to me that the stock market’s anxiety attacks are getting shorter,” Ed Yardeni of Yardeni Research said in a note. The post-Brexit selloff lasted only two days, followed by two months of easy gains. Tuesday’s selloff, though, will disabuse anybody of the notion that Friday’s selloff was a one-off. When volatility returns, and it has, it’s not a one-day affair, and it will push and pull assets up and down.
The Dow was down about 200 points (1%) a half-hour into trading on Tuesday morning, almost completely erasing Monday’s gains. The S&P 500 was down 25 points (1.2%), and the Nasdaq Composite was down 49 points (0.9%). Moreover, the market now has a full week between today and the Fed’s policy statement in which there will be virtually no data. Just traders sitting around questioning valuations.,,,MORE