American small and medium-size companies that rely on China are scrambling to adjust their business plans in response to the escalating trade war.Traderead more
Here are the products that stand to be the most affected by China's new tariffs on $75 billion worth of U.S. goods.Marketsread more
The summit comes amid fears over a global economic slowdown, and U.S. tensions over trade allies, Iran and Russia.Politicsread more
The world's second biggest economy is past a point where it cannot ignore its enormous debt anymore, according to an analyst.China Economyread more
Trump does have some powerful tools that would not require approval from U.S. Congress.Politicsread more
Carl Medlock used to work at Tesla. Now he's one of the few people in the U.S. that can fix the company's original Roadster electric vehicles.Technologyread more
Stocks dropped after Donald Trump ordered that U.S. manufacturers find alternatives to their operations in China.US Marketsread more
As demand for lab monkeys continues to rise, U.S. scientists are reporting delays in research projects because they can't obtain enough animals, according to the National...Politicsread more
The European Union will respond in kind if the U.S. imposes tariffs on France over digital tax plan, EU chief Donald Tusk told G-7.Technologyread more
Trump said he will raise tariffs on $250 billion in Chinese goods to 30% and hike duties on another $300 billion in products to 15%.Politicsread more
China said on Saturday it strongly opposes Washington's decision to levy additional tariffs on $550 billion worth of Chinese goods and warned the United States of consequences...Politicsread more
The recent mini-correction in stocks has been driven mostly by technical factors and should reverse as companies progress through earnings season, according to J.P. Morgan strategists.
One of the key figures will be share buybacks, which have propelled much of the nine-year-old bull market and will resume as more companies report and emerge from the pre-earnings quiet period. Other factors cited that could contribute to a turnaround include a generally stronger profit outlook, a decline in volatility and current bearish positioning that will reverse as confidence returns.
"Ultimately, the evolution of fundamentals rather than technicals will dictate the duration and end of this cycle," Dubravko Lakos-Bujas, head of U.S. equity strategy at J.P. Morgan, said in a note to clients. "Tame inflation combined with a still positive earnings backdrop and non-inflationary growth should allow this bull market to run for longer."
Lakos-Bujas sees the technical-driven selling as about 80 percent over. Systematic strategies along with commodities trading advisors are helping to drive the drawdown, which saw the S&P 500 shed about 7 percent at one point.
The major averages have climbed back and recovered much of their losses, though Thursday saw another decline after minutes from the most recent Federal Reserve meeting, released Wednesday, indicated the central bank remains committed to a steady diet of interest rate hikes ahead.
Longer-term fundamentals indicate that the downdraft should pass soon, Lakos-Bujas said.
Wall Street figures companies will buy back upwards of $1 trillion of their own shares this year, thanks in part to a windfall from last year's tax cut, which lowered the corporate rate and provided incentive to repatriate profits stored overseas. The buybacks will help improve market liquidity and inspire confidence about the overall market picture, according to the J.P. Morgan report.
The current situation is "a temporary correction within an ongoing bull market," Lakos-Bujas wrote.
In particular, the firm likes small-cap stocks because of their risk-reward picture as well as mega-caps that will benefit from defensive positioning that prevailed heading into the sell-off and could reverse after another strong earnings season. The S&P 500 collectively is expected to show a year-over-year profit gain of 19.1 percent, according to the latest FactSet estimates.
Both the S&P 500 and the Russell 2000, which tracks small-cap stocks, hit "extremely oversold" levels last week, according to the analysis.
"In addition to being cheap in absolute terms, valuation looks even cheaper if taken in context of low global interest rates," Lakos-Bujas said.