The day after. Stocks in the United States opened higher on the day after the S&P 500 Index lost 5.9%. Spikes in new COVID-19 cases, worries over a cautious Federal Reserve, small retail traders’ excitement over weak balance sheet companies, and historically overbought conditions were all factors. Europe is up nicely, and Asia was mixed. Calm is in the air, as there are no major new events moving markets so far today.
Worst day since March. Stocks sold off hard Thursday, with the S&P 500 having its worst day since March 16 and its first three-day losing streak since early March. After a 44% rally, we think a pullback would be well deserved. We show why historically overbought markets tend to occur near the start of bull markets, not the end, in today’s LPL Research blog.
COVID-19 news. Confirmed US cases rose 1.14% yesterday, matching the week-ago total and giving evidence that the downward trend may be flattening out. The biggest week-over-week increases came from Arizona (4.7%), Arkansas (4.3%), and Alabama (3.9%). Houston may re-impose stay-at-home orders after Texas reported its highest one-day tally of new cases. Cases in Germany are rising while falling steadily in the United Kingdom. Tokyo has moved to the final stage of its reopening plan (Source: COVID-19 Tracking Project).
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