Market Update: Fri, Mar 13, 2020 | LPL Financial Research

DAILY INSIGHTS

 Sharply higher open, futures up “limit.” This morning’s gains come after one of the biggest one-day declines in stock market history yesterday that dragged the S&P 500 Index into bear market territory, ending the longest bull market in history. Traders are taking their cues this morning from improving prospects for a stimulus package out of Washington, expectations of more policy responses from global central banks, and deeply oversold conditions. Asian markets bounced off their overnight lows after several trading halts, while stocks in Europe are sharply higher in midday trading across the pond.

Central banks stepping up. The Fed pumped—or announced it will pump—trillions of dollars into the financial system, effectively re-instating quantitative easing. The European Central Bank and Bank of Japan expanded their short-term lending programs and increased securities purchases, including exchange-traded fund purchases in Japan. The People’s Bank of China cut reserve requirements for banks. Though no panacea, these moves along with fiscal policy actions will help buy some time while the containment measures take hold.

Signs of a washout? One of the worst three-week stretches in market history has investors searching for a bottom. Certainly panic has gripped the market, and today’s LPL Research blog takes a look at some sentiment indicators that are flashing extremes typically seen only at or near major market lows.

 

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