To be continued. After a nerve-racking day of ups and downs, the market finally closed in the black. The Dow Jones Industrial Average gained 287.16 points on Friday, up 1.2%, to 25,339.99. The S&P 500 rose 1.4%, and the Nasdaq Composite advanced 2.3%, driven by tech stocks’ strong comeback. But all three indexes are still lower for the week. It remains to be seen whether this will mark an end to the latest selloff. In today’s After the Bell, we…
…examine where fears and hopes are hiding; …consider that maybe the selloff means strength is broadening; …and explain why Netflix shot to the top of the S&P 500. What Were We Afraid Of?
There has been much speculation about the reasons behind the selling—the Federal Reserve’s rate increases, trade tensions, or simply fatigue late in an economic cycle. Brent Schutte of Northwestern Mutual Wealth Management thinks these worries are at best negligible.
Trade friction in general has decreased in the fourth quarter after the U.S., Mexico, and Canada reached a deal to replace the old Nafta framework, Schutte writes in a Friday note. “The issue is gradually narrowing from worry of a global trade war to a spat between the U.S. and China—an important development with regard to overall economic and market risk,” he writes.
Many worry that the Fed’s tightening could lead the U.S. into a recession, but Schutte doesn’t think that is likely. “After the Great Inflation of the late 1970s/early 1980s, the Fed was laser-focused on not letting the inflation boogeyman out of the bag at all costs, even