Market recovery is 'ignoring' remaining tariff uncertainty
Sam Stovall, CFRA Research chief investment strategist, joins Morning Brief to explain why investors may be underestimating risks as the recovery outpaces historical norms.
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
What are the technicals telling us for right now from what you've been able to read through?
Well, good morning, Brad. Uh basically it seems as if the uh all-time high set on February 19th is sort of serving as a tractor beam for those uh Trekkies out there, uh dragging in a sense the market up toward it, uh and causing this correction of 19% to be concluded. So, recovering all that we lost in a fairly short period of time. Historically, it takes us about four months to get back to break even, uh after reaching a bottom, uh but in this case, it's going to end up being half of that amount of time. So, I I would tend to say that even though we have an awful lot of uncertainty relating to tariffs, relating to, uh, trade negotiations, etc., uh, the market seems to be ignoring it like a ping pong ball dropping on a table. The first reaction was the greatest and every subsequent one has been more muted.
Is the market right to be doing that, or is there a potential for investors to be caught off sides, especially heading into their summer vacations? Can they trust that the worst is behind them?
Well, historically, June is a fairly unimpressive month. Uh, it's in the bottom third in terms of average price change, uh, significantly underperforming the average return for the S&P 500 itself, um, during all months. Uh, also, um, essentially the volatility is fairly mild, but, yeah, I would tend to say that, um, since this is a manufactured correction, uh, the one who's holding all the cards is the president, and should he decide not to make some agreements with China, uh, or to initiate, uh, new obstacles in terms of trade with our other partners, etc., that could end up upsetting the Apple cart, if you will, especially if we end up having problems with rare earth minerals, uh, being, um, imported to the US to, uh, help out our automobile industry and other areas.
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