Yahoo Finance US Stock Market: Further Sell-off or ‘Sell Rumor, Buy Fact’ Situation?
The major U.S. stock index futures are edging higher early Wednesday, following a steep sell-off the previous session. So far three stories have generated mild whip-saw price action, which is likely to continue and escalate over the near-to-mid-term as the story plays out.
The early response to the news indicates that the best thing to do is prepare for a geopolitical roller-coaster ride that could rip U.S.-China trade negotiations from the headlines.
In the cash market on Tuesday, the benchmark S&P 500 Index settled at 2966.60, down 25.18 or -0.90%. The blue chip Dow Jones Industrial Average finished at 26807.77, down 142.22 or -0.56% and the technology-based NASDAQ Composite ended the session at 7993.63, down 118.83 or -1.56%.
Sell the Rumor?
The initial plunge in the stock market was fueled by speculation that House Speaker Nancy Pelosi would announce a formal impeachment inquiry into President Donald Trump after she met with her caucus to discuss the phone call Trump had earlier this year with Ukraine’s leader, Volodymyr Zelensky, where he allegedly pressured him to investigate Democratic presidential hopeful Joe Biden’s family.
Dead Cat Bounce?
The major stock indexes trimmed their losses shortly thereafter when Trump said he would release the full transcript of the controversial call. Trump said in a series of tweets he “authorized the release tomorrow of the complete, fully declassified and unredacted transcript of my phone conversation” with Zelensky.
Market Steadies
The indexes finished off their lows on Tuesday as traders awaited the official announcement from Pelosi after the close. At that time, she announced a formal impeachment inquiry against Trump. The probe centers on whether Trump abused his presidential powers and sought help from a foreign government to undermine Democratic foe Joe Biden and help his own reelection. Pelosi said such actions would mark a “betrayal of his oath of office” and declared: “No one is above the law.”
Stocks Rise in Pre-Market Session Ahead of Transcripts
U.S. stocks are currently trading higher in the pre-market session on Wednesday as investors await the release of the transcripts of the Trump’s phone call with the Ukraine leader. This is likely to fuel the next wave of volatility in the stock market.
If the market feels there is enough evidence in the transcripts to eventually proceed beyond the initial impeachment inquiry then stocks are likely to decline further. If investors believe there is not enough evidence for the impeachment process to begin then we’re likely to see a “sell the rumor, buy the fact” situation.
This article was originally posted on FX Empire
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