Global markets staged a strong rebound today, recovering from yesterday’s dramatic selloff sparked by a flash crash in Japan and concerns over the U.S. economy.
Between the lines: “I think people realize that was a little bit of a panicked reaction yesterday to a big fall in Japan,” says David Kelly, chief global strategist at J.P.
Morgan Asset Management. He noted the market’s exaggerated response to Japan’s sudden dip.
By the numbers: The S&P 500 and Nasdaq both climbed 1.0%, while the Dow Jones rose 0.8%, reversing yesterday’s losses.
Japan’s stock index surged 10.2% overnight, its best day since October 2008, after plummeting 12.4% on Monday.
The intrigue: Fresh U.S. economic data showed a rise in new orders and employment growth in the services sector, suggesting the economy isn’t as fragile as feared.
Although this data didn’t stop the market’s fall yesterday, it indicates that not all signals are negative, according to Kelly.
This positive trend is also encouraging for the business community, which relies on economic stability to plan and grow.
The big picture: Market volatility is nothing new. Historically, the U.S. stock market experiences corrections almost annually.
However, recent low volatility made this week’s swings feel more jarring.
What we’re watching: The impact of the yen carry trade on global markets remains uncertain due to its speculative nature.
Meanwhile, Kelly asserts that concerns about the U.S. economy may be overblown.
“We’ve actually got a very strong economy in terms of corporate profits. And inflation has proven to be on a down track,” he says.
This market rollercoaster highlights the unpredictable nature of trading, but seasoned investors know how to ride out the waves.
As always, staying informed and patient can make all the difference.
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