Stocks are now in a choppy period, and technical analysts say it has the look of a short-term pullback.
Strategists say it would make sense for this week’s selling to fit in the pattern of many pullbacks with a 3% to 5% decline.
But corporate earnings season could decide the fate of the sell-off, which took the S&P 500 to Tuesday’s close of 4,134, a decline of 1.2% from record highs on Friday.
“This is the quick move lower to relieve the overbought nature of the market,” said Scott Redler, chief strategic officer with T3Live.com. He follows the market’s short-term technicals. “A normal pullback can see 3,983 to 4,000 and still be healthy.”
· Use the market pullback to get into growth stocks, says strategist
Victoria Fernandez of Crossmark Global Investments shares some picks on “Squawk Box Asia”, saying the market consolidation presents a good opportunity to get into high-valuation names.
Asian shares and U.S. stock futures fell on Wednesday as concern about a resurgence of coronavirus cases in some countries cast doubt on the strength of global growth and demand for crude oil.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.08%. Australian stocks dropped 0.56% but shares in China recouped early losses and rose 0.29% due to positive earnings from the healthcare and banking sectors.
MSCI’s index of global shares fell 0.3%.
· Japanese shares extend losses as investors brace for more lockdowns
Japanese shares extended losses on Wednesday as investor fears of potential lockdowns in the country’s biggest cities cast doubts over the prospects of an economic reopening.
Nikkei share average tumbled 2.03% to close at 28,508.55, while the broader Topix fell 1.98% to 1,888.18 - both indexes dropped the most in about a month.
· China blue-chip shares end higher on healthcare, banking gains
China shares ended higher on Wednesday with healthcare and banking stocks leading the gains, following upbeat quarterly earnings reports.
The Shanghai Composite index closed flat at 3,472.93, while the blue-chip CSI300 index was up 0.3%.
European stocks were higher on Wednesday morning, as investors digested new earnings reports and economic data.
The pan-European Stoxx 600 index was up 0.5% in early deals, after sinking by nearly 2% on Tuesday. Tech stocks and oil and gas firms were the main drivers on Wednesday morning.
On the earnings front, AkzoNobel, Heineken, Randstad and Roche were among the companies reporting on Wednesday.
Heineken shares surged by nearly 5% after its trading update pointed to better-than-expected beer volumes for the first quarter.
Reference: CNBC, Reuters
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