Drop in first day of August may mean a correction month after epic rebound rally in the past 4 consecutive months
After a phenomenal 4-month 28% rebound rally between April 8th & July 31st without a 5% correction, US market started August with a big 1-day drop of 1.2%-2.2% by three US benchmark indexes on the month’s first trading day. Near term catalysts are weak payroll report, lower chance of a September rate cut, some worst-than-forecast earnings results from Amazon and other retail & industrial stocks and probably the most important of all is the renew fear on tariff after high tariff to some countries by Trump last week.
In the part or most of August, equity market may stage a bigger technical correction amid these worries. However, albeit bigger than anyone pullback in the last 16 weeks, this would still be a mild to moderate correction but not a reversal or the end of the current uptrend. A few bad news mentioned above are small dents on the favourable background of economy & financial markets that are not big enough to derail US economic & market outlook.
