Buy the dip?
US stocks reversed much of their earlier losses, with the Nasdaq moving back into the green on Monday as the selloff in risks assets triggered by the Republicans’s failure to repeal and replace Obamacare eases.
The S&P 500, having tumbled by as much as 0.9 per cent, was trading down just 0.1 per cent by mid-day trading. The benchmark blue chip index was boosted by the rally in hospital operators, which helped lift the wider healthcare sector 0.4 per cent higher.
The Dow Jones Industrial Average similarly cut down its losses from 0.9 per cent to 0.2 per cent, while the Nasdaq Composite erased a 1 per cent decline to trade 0.2 per cent higher.
The fightback was particularly pronounced in the financial sector, suggesting perhaps that investors are still relatively upbeat over the Trump’s administration ability to push through its proposed tax reforms and deregulation. The closely-tracked KBW banks index recovered from a 3 per cent drop this morning to trade just 0.5 per cent lower at pixel time.
“The global equity market pause last week has been attributed by some market watchers to a reversal of the “Trump Trade,” given disappointment over U.S. domestic and foreign policy,” said Peter Donisanu, investment strategy analyst at Wells Fargo Investment Institute.
“Whatever the catalyst for the sell-off may have been, we believe that improving trends in macroeconomic fundamentals likely will underpin equity-market performance this year.”
The rally in haven assets also eased somewhat. Yield on the 10-year Treasury note, which moves inversely to prices, is down 3.9 basis points at 2.373 per cent, after having hit a session low of 2.3460 per cent.
Gold prices are 1 per cent higher at $1,255.37 per troy ounce. It was up as much as 1.4 per cent earlier in the day.