3 Issues Are Causing Worry for Investors on Tuesday Morning
Excessive speculation in secondary stocks is hitting as third-quarter earnings start.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Following a healthy one-day bounce, trade tensions with China and cryptocurrency liquidations are pressuring the market on Tuesday morning. China is imposing restrictions on U.S. subsidiaries of Korean shipping companies and calling into question President Trump’s statements that relationships with China remain positive.
There have also been massive liquidations in the cryptocurrency market. It is largely in altcoins, but there is a large drop in Bitcoin (IBIT) and Ethereum (ETH) as well, which is raising concerns about speculative issues.
A third concern is that Treasury Secretary Bessent is stating the government shutdown is starting to have an economic impact. So far, the market has been unconcerned, but the longer this situation drags out, the greater the risk of a negative market reaction.
While the S&P 500 and other indexes bounced back nicely from the tariff scare on Friday, there was some extreme speculative action under the surface of the senior indexes on Monday. The Russell 2000 (IWM) bounced back nearly 3% and the Innovator IBD 50 ETF (FFTY) was up nearly 4%. There was a very long list of big moves in sectors like rare earth, semiconductors, quantum computing, nuclear power, and data centers. Many of these stocks have no earnings and lack fundamental support.
This chaotic action coincides with the start of third-quarter earnings season, which includes reports from Goldman Sachs (GS) , JPMorgan Chase (JPM) , and others in the financial sector. The reaction to these reports will provide additional insight into the mood of the overall market.
One consistent theme this year has been that it is a mistake to overreact to negative news on trade. President Trump’s pattern is to soothe the market after aggressive announcements, but China’s aggressive moves are making that more difficult.
Volatility is increasing, which is a negative, especially as speculative trading becomes increasingly heated. My best advice is to keep a close eye on your stocks and look to reduce some exposure as opportunities arise. The name of the game is to protect profits and to keep accounts as close to highs as possible.
At the time of publication, Rev Shark was long IBIT.
