Wednesday, 4 December 2019

Markets fall on concern over trade talks but Fed policy supportive

Markets fell on Tuesday.

The S&P 500 fell 0.7 percent, its third consecutive decline, the STOXX Europe 600 fell 0.6 percent and the Nikkei 225 fell 0.6 percent.

Stocks fell after US President Donald Trump said that it might be “better to wait until after the election” before concluding the US-China trade talks.

Some analysts think that the US stock market's record-breaking run had left it vulnerable to a sharp reversal.

“When everyone is leaning one way, eventually something can tip the scales the other way,” said Keith Lerner, chief market strategist at SunTrust. “The biggest risk to the market is that the trade stuff starts unraveling.”

“Something that goes straight up, usually goes straight down,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Still, some analysts think that easy money from the Federal Reserve will help keep stocks up.

“Any pullback would likely be very short-lived given how accommodative Fed policy is,” said Kristina Hooper, chief global market strategist at Invesco.

Also, Mark Hulbert at MarketWatch said that Hayes Martin, president of Market Extremes, has noted that most of the market’s sectors have participated in the market’s recent runup to new highs.

“Crashes or bear markets do not occur under conditions of high liquidity and strong internals,” Martin said.

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