An inescapable fact of stock trading and investing is that you will come across times when the market just keeps dropping due to various factors. Political and financial uncertainties are the primary factors here. These factors bring about vagueness in how things will end up being. That has a major bearing on the markets.
A Week to Forget Ends on a High
After a week dogged by uncertainty over various aspects and the market dropping as a result, the stocks actually ended the week from the 8th to the 12th of October, 2018 on a high.
On Friday, October 12 the two-day dip ended with the major indices rallying. They finished the session positively, kindling hopes that the market can get back on track after what seemed like a downward spiral that week. And this positive movement was crucial, considering that companies were gearing up to announce their quarterly earnings.
A Day of Rebounds
One of the major factors behind the market dragging was the weakness shown by the tech sector. But that sector experienced a rebound on Friday which helped the NASDAQ to rise 2.29% to close at 7.496.89. The FANGs were highlighted by particularly strong performances by Amazon ($AMZN, +4.03%) and Netflix ($NFLX, +5.75%).
On Friday, the S&P finally jumped 1.42% to reach 2,767.13 and break a losing streak lasting six days. The Dow could advance 1.15% to reach 25,339.99, a gain of around 287 points. Though that isn't much when compared to the loss of 1400 points it suffered in the previous two days, it is certainly a positive step.
That week saw all the indices sinking by about 4% each. Friday was a topsy-turvy day, with the stocks soaring in the morning and then giving away all those gains by mid-day. The Dow slipped from its 400-point rally. But when it mattered, in the final hours of the day, the stocks went up to give everyone some cheer.
Positive Earnings Fan the Flames of Hope
Experienced analyst Martin Tillier weighs in on why the earnings season is so important to boost the markets and the hopes of investors and traders. The reason is that stocks have expectations piled on them. When these expectations fail to be met, you find the stock prices dropping. Earnings are usually supportive of markets, Tillier thinks. Positive earnings can save the markets during times of volatility. If companies report strong revenue gains and EPS figures, they instill hope in investors that though there are many things to worry about there is still the brighter side proved through solid figures.
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