S&P 500 falls, future movements uncertain

TradingPub Admin | August 7, 2013

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Want some free stock trading education on how declines in major indices can be interpreted in different ways?

A perfect example is the drop that the S&P 500 Index experienced on August 7, and the reactions that market experts had to this depreciation, according to Bloomberg. This group of equities fell 0.4 percent during the day, closing at 1,690.91 by 4 p.m. in New York.

This decrease extends the declines that the S&P had on the day before, when the S&P experienced its sharpest drop in six weeks, pushed lower as market participants responded to statements made by Fed officials, the media outlet reports.

This drop in the value of the index was strong enough to cause it to fall below its 14-day moving average of 1,693.95, which had previously provided the group of stocks with technical support, according to Reuters.

Market expert reactions
Some market experts were bearish in their comments, and Rick Meckler, president of Jersey City-based LibertyView Capital Management, told the news source that stocks are now facing a new environment. He said that since interest rates have been trending higher, there will be more resistance to limit the potential appreciation of equities. He said that robust corporate earnings will be needed to create substantial gains in stocks. 

On the other hand, Terry Sandven, who works as chief equity strategist at U.S. Bank Wealth Management in Minneapolis, was more optimistic, telling Bloomberg via telephone that stock prices will probably remain within certain limits in the near future.

"We're just going through a period of consolidation," Sandven told the news source. "We still like the outlook for the broad equity market, but near term we're probably in a trading range pattern until we get greater clarity as to what happens with quantitative easing."

Central bank concerns
The future tapering and eventual elimination of QE that Federal Reserve officials have mentioned repeatedly in their statements has been another major concern that has been noted by market experts.

Federal Reserve Chairman Ben Bernanke roiled markets in June when he stated that the central bank could start reducing bond purchases as early as this year, and even stop them in 2014. He told this to members of the media at the conclusion of that month's Federal Open Market Committee meeting, which caused widespread declines in asset values.

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