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The market has slumped badly in the past several weeks, but it hasn’t fallen in a straight line. Volatility is spiking, and huge sell-offs have been interspersed with big gains, including October 16’s 548-point jump for the Dow and October 12’s 287-point gain.
Still, the back and forth has been heaviest in one direction: down. The S&P 500 was less than a percentage point drop away from entering a correction Wednesday. Investors had been looking for strong corporate earnings to drag stocks out of the doldrums, but earnings have disappointed this quarter. That gave already nervous investors more anxiety.
“No matter how good the report or how positive the guidance, investors are looking for the exits,” said Justin Walters, cofounder of Bespoke Investment Group, in a note to investors Thursday. “Companies that are reporting earnings this season are getting slaughtered.”
The average stock has fallen 2% the day after reporting earnings this quarter — the worst performance of the 21st century, according to Walters.
Concerns about rising rates and the trade war have spooked the markets this month. The S&P 500 has fallen more than 8% in October, and the Nasdaq is down 10%. Only 13% of stocks are trading above their 50-day moving averages, evidence that Walters believes suggests stocks have been oversold.
Investors agreed on Thursday at least. They saw a buying opportunity, particularly in tech.
All of the FAANG stocks were up about 2% in early trading.
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