By Yihan (Bradley) Tian
This past week has been one full of conflicting elements as reflected in the unstable market trends. As of Friday, May 15th, all three major indices have displayed a slight rebound from declines earlier this week. Market closed with S&P 500 up 0.39%, NASDAQ 0.79%, and the Dow 0.25%.
A focal point during this past week has been the continuing China-US trade tension. Earlier this week, President Trump mentioned a likely blockade of semiconductor shipments to Huawei Technologies. China later responded with inclinations toward putting US firms on an ‘unreliable entity list’.
Federal Reserve Chairman Jerome Powell rejected the possibility of deploying negative interest rates as a measure to further quantitative easing earlier this week. Regarding the economic outlook, Powell expresses uncertainty and predictions for a difficult, slow recovery. “The passage of time can turn liquidity problems into solvency problems,” Powell stated.
The CBOE Volatility Index (VIX) surged as much as 13.97% this week, indicating increasing fearful sentiments towards May & June futures. On Friday it closed with a 2.21% decline.
Investors are now shifting their attention from defensive sectors such as energy and financials to the technology and healthcare sectors, which has exhibited considerable resistance against the overall downturn this week. Specifically, optimistic predictions have been directed towards teleworking technologies and pharmaceuticals as they are significantly influencing the future as reopening proceeds.
Source: Reuters, MarketWatch, Investing.com, Morningstar, University of Michigan, CBOE
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