US Stock futures were trading higher on Friday with futures contracts of all three leading indices in green. S&P 500, Dow 30 and Nasdaq 100 futures were up by nearly 0.30 per cent, 0.10 per cent and 0.49 per cent respectively.
In the stock market meltdown, S&P 500 (SPX) has been a recent casualty, with the index falling by almost 20 per cent from its recent highs of 2021 before recovering from the lows. SPX closed at 4,057.84 and is still almost 15 per cent down over 12-months.
The rally seen this week in S&P 500 is being called a bear market rally by most market oberversors. SPX is up by almost 4 per cent over the last 5-day session.
In fact, S&P 500, Dow 30 and Nasdaq 100 are on the way to close the week higher than before.
Still, calling it a reversal may be too early if experts are to be believed.
“Though the selloff may seem intense in the US market, it probably hasn’t reached the bottom yet. Because typically, after every bear fall, the market bounces back with a significant vigor, usually in excess of 10%, and we are yet to see that. There is no clear rule to spot the bottom. At best, we can guess the bear run is over when the rebound gains strength,” says Kunal Sawhney, CEO of Kalkine Group.
Fed’s FOMC minutes could also be the reason for the market to cheer about. The May 3-4 FOMC meet minutes revealed that future rate hikes may not be as aggressive as the market expected them to be. Also, retail earnings outlook appears to be more optimistic than envisaged earlier.
The Fed’s role in taming inflation without hard-crashing the economy remains the biggest factor for the global investors. More than trying to time the market, long term investors need to stick to the approach of ‘time in the market’.