Stocks extended their short-term losses on Wednesday, as they retraced most of last week's Friday's rally. The broad stock market failed to continue its rebound from February 9 low despite technology stocks reaching new record highs.
The robust U.S. jobs report on Friday managed to offset concerns of a trade war, at least for now. The 313,000 additional jobs took economists and markets by surprise as the figure exceeded even the highest expectations of 300,000 noted in a Reuters survey.
Stocks rallied on Friday, as investors reacted to better-than-expected monthly Nonfarm Payrolls number release. The broad stock market retraced its late February move down, while technology stocks reached new record highs.
The Nasdaq 100 has been lurking within 2% of its all-time high since late February and Friday’s monster gain of 1.8% finally achieved the inevitable.February’s Consumer Price Index data is due out Tuesday at 7:30 a.m. Central. The Core read that excludes food and energy is the most closely watched data point. Industrial Production, Fixed Asset investment and Retail Sales are due out of China on TuesdayEvening.
Wednesday's trading session was overall bullish, as the main stock market indexes closed between -0.3% and +0.3% vs. their Tuesday's closing prices following much lower opening in reaction to Gary Cohn's resignation's news.
Anyone who has ever taken economics 101 has learned tariffs generally leads to a trade war, which can be a disaster for an economy. Donald Trump says it will work out for us. Like many others including the stock market, I have my doubts. The bottom line as far as trade deals and geopolitical situations are concerned, we didn’t get into this position overnight and this President has had to deal with huge trade deficits. I’m not sure this is the best approach.
The main U.S. stock market indexes were mixed between -0.3% and +1.1% vs. their Thursday's closing prices on Friday, following lower opening of the trading session and an intraday bounce off support levels.
One way to prevent losses in a deteriorating position is the use of stop-loss orders. A stop-loss order is activated when a stock, ETF or futures contract reaches a certain price point. Let’s use the example of Facebook. On the afternoon of Jan. 4, 2018, a purchase of FB is made at $185. After rising above $188 a stop is placed to sell FB at $184 (just below the previous high close) on Jan. 11. This means that at $184 the stop becomes a market sell order and the long position is liquidated.