Published September 11, 2020
The Nasdaq is up about 26 percent year to date and up 63.58 percent from its 52-week low of 6,631.42 on March 23. After remarkable gains in August, the market started September with more gains and then losses. The Dow Jones dropped 1.8 percent in the week leading up to Labor Day, while the tech-heavy Nasdaq dropped 3.3 percent, losing nearly half of its August gains.
Some observers blamed earnings disappointments, and some blamed whale-size option trading by SoftBank. Possibly it was concern over the virus, lack of progress on another relief bill and increasing tensions with China. Was it a warning?
Like the chief in “One Flew Over the Cuckoo’s Nest,” investors seemed stoic. By Friday afternoon, prior to Labor Day weekend, selling had turned to buying. Apple turned an 8.3 percent drop into a 0.1 percent advance. Was it a buying opportunity?
The day after the holiday weekend, all the indices nosedived again. Then, on Sept. 9, the Nasdaq was up strong on the day in a continuance of market volatility.
Why is there still such buying interest at lofty (by historical standards) multiples? Low interest rates make the market look cheap. Federal Reserve Chairman Powell says low interest rates will last for years, and the Fed isn’t even thinking about thinking about rate increases. We can expect easy monetary policy for years to come, and that’s generally good news for […]