The Financials Have Been Down A Record 13 Straight Days

Stocks Open Up On Trump Statement

The stock market rose at the beginning of Wednesday’s trading session because the statement about technology investment wasn’t as draconian as expected. The President released plans to strengthen use of the Committee on Foreign Investment in the U.S. There was no specific 25% Chinese ownership block like mentioned in the Wall Street Journal story. Trump’s statement didn’t even mention China, just like Mnuchin said in his tweet. You can think of a block as an action that would have been a major change, while this move to strengthen CFIUS is a small change in the protectionist direction.

The House version of the bill to strengthen CFIUS puts more stringent reviews on investments from China, North Korea, Iran, Russia, and Venezuela. Reviews aren’t as bad as blanket restrictions. Plus, investors think a group of professionals deciding on restrictions is better than the White House deciding on them. This tactic where the White House didn’t go as far as the market feared is either a grand plan to get the market to accept changes or simply the White House seeing what it can get away with and backing down when stocks fall. In other words, the White House is over promising and then under-delivering, playing the expectations game, or is trying to push as hard as it can without causing stocks to fall.

Major Reversal Possibly Because Of Rebalancing

The S&P 500 was up about 0.82% early in the trading session on this trade news, but then it had major reversal which caused it to close down 0.86%. From the peak of the day to the close S&P 500 fell 1.67%. The CNN Fear and Greed index is now at 36 which signals fear. This indicates investors should buy any further declines. The Russell 2000 was down 1.68% on the day and the Nasdaq was down 1.68%. Some market commentators are saying the market fell because of rebalancing which occurs at the end of the quarter. That probably doesn’t satisfy the bulls who were hopeful that the market could regain the losses from Monday since the negative catalyst investors feared ended up being less of an issue than expected.

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