Jerome Powell Propels Market Snapback With Recession Message
The Federal Reserve chair managed to reverse some gloomy market action as anxiety over tariffs and the U.S. economy grows.
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It was an ugly week for the market due to concerns about tariffs and economic conditions. However, there was a decent reversal on Friday after Fed Chair Jerome Powell stated that, despite the high level of uncertainty, the economy is in a good place and there doesn’t appear to be any immediate danger of a recession.
The Fed plans to stay patient and not make any major policy moves right away. The market mood was excessively gloomy on Friday morning, so the mildly positive comments from Powell helped trigger a little snapback.
It is very hard to trust a countertrend bounce in a market that has dropped so sharply, but shorts often tend to cover positions after a good week.The primary problem that the market faces now is extensive technical damage.
There are many trapped bulls that would like to lessen their losses and escape the misery of this market. This creates a tendency to sell into bounces and prevents them from gaining traction.
Unfortunately, the market is still dealing with substantial uncertainty. The February jobs news was okay, but it didn’t produce any clarity. Next week, the market will consider the JOLTS job openings data along with CPI and PPI.
The biggest danger is that President Trump could announce reciprocal tariffs at any time. Not only is the imposition of tariffs unclear, but there is a wide variety of opinions about their impact.
The good news is that we are already deep into corrective action. The IBD 50 Growth Stocks FFTY are already in a bear market, and the Russell 2000 IWM isn’t far behind, with a drop of 17% from the January highs.
Once there are some signs of support, the stock pickers should become much more active as they look for the best opportunities.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
