#MarketRebound Here’s what it may take for this beaten-down stock market to solidly rebound
The clock striking midnight on Trump’s tariffs set off some wild trading action early Wednesday. Stock futures have been all over the map, since an early slump, though catching more attention has been dramatic action for 10-year Treasury yields that spiked earlier and are climbing again:
An auction of 10-year paper later will offer more clues about appetite for U.S. Treasurys, as some have begun to consider a possible emergency rate cut from the Fed.As for stocks, some, like our call of the day from Revere Asset Management portfolio manager Connor Bates, say stocks are poised for a bounce. He says a “short-covering rally in the coming sessions” is likely.
“Traders are scared to hold positions overnight, and frustration with the market is widespread. Most people, especially those who’ve been burned recently, have little to no interest in getting involved right now,” Bates said in a string of posts on X.“Monday’s lows are a critical line in the sand — if these levels are convincingly broken, the probabilities for a bounce decrease significantly. However, keep an eye out for an undercut and reclaim scenario,” he said, referring to, for example, the S&P 500 dropping below a key support level, then quickly bouncing back above it.
The S&P 500
+9.52%
hit a low of 4,835 on Monday.
He’s not alone with the rebound call. Raoul Pal, co-founder and CEO of Real Vision financial media company, posted on X that the current market “feels a lot like Dec. 2018.” Stocks had endured weeks of selling and a brutal Christmas Eve, but in January 2019, Fed Chair Jerome Powell signaled a dovish pivot and equities rallied.
“I think we get the same, plus a trade resolution with China. Risk in stocks feels like 10% downside max vs 15% upside in 2 weeks, and 25% upside in a month or two, and much more in 6 months,” he wrote.
