Wall Street calms after a strong rally amid sharp losses in gold and silver

The rally that pushed stocks to near record levels has subsided, with signs of buyer fatigue emerging. Gold and silver prices recorded sharp losses as the US dollar rose. US stocks traded little changed as the S&P 500 index closed almost flat. Despite recent risk reductions amid fears of trade and credit strains, equity exposure levels among global hedge funds and traditional investors remain at their highest level in more than a year, according to Barclays. Piper Sandler’s Craig Johnson said: “Our short-term technical expectations suggest that stocks will experience a period of consolidation or decline in the coming weeks. We see these declines as healthy and necessary.” While the US government shutdown caused an absence of economic data, the declines in stocks were short-lived as investors saw them as opportunities to increase risk in their investment portfolios. Pepperstone Group’s Michael Brown said: “Downsides don’t last long as investors see them as opportunities to increase risk in their portfolios. The path of least resistance is still up, and dips remain buying opportunities.” Mixed moves for stocks and commodities: The Dow Jones Industrial Average hit a new record high, driven by optimistic expectations from 3M, while Alphabet shares fell after OpenAI announced the launch of the Chat GPT browser powered by artificial intelligence to compete with Google. Lately, Netflix said a tax dispute with Brazil had negatively impacted its profits, while Texas Instruments provided conservative forecasts. The 10-year U.S. Treasury bond yield fell two basis points to 3.96%. Bitcoin rallied, while gold and silver prices saw their biggest drop in years, after investors took profits amid fears that the recent historic rally had made them overvalued. A group of factors contributed to the decline in precious metals, including optimism regarding trade talks between China and the United States, the strength of the dollar, and the exaggeration of technical gains, in addition to the uncertainty caused by the shutdown of US government data and the end of the seasonal buying wave in India. Fawad Razzaqzada of City Index and Forex.com said: “The rise in gold prices over recent months has been exceptional, driven by falling yields, continued central bank purchases and expectations of further monetary easing.” He added: “Markets rarely move in straight lines, but it is too early to say that the uptrend is over. Corrections are natural, and many investors who missed out on the big gains may return to buying on the dips, which will limit the severity of the decline.” Miller Tabak’s Matt Maley, for his part, said he will be monitoring the recent lows in precious metals for indications that they will see something more than just a bump in the near future. He added: “Experience shows that sharp swings after big waves of gains can be an indication of the market’s readiness for a tangible correction, but it does not necessarily mean the end of the bull market.” However, such movements cause concern among investors and traders.” Gold is the most volatile since the pandemic. Gold, the traditional safe haven for equity investors, has been in its most volatile period compared to the S&P 500 index since the Corona pandemic. The difference between gold’s 30-day volatility and the US index exceeded 11 points, the widest range recorded since September 2020. The “Bainbridge” company increased its investments exposure to gold at the expense of long-term government bonds, and has also increased its holdings of the dollar, believing that the US currency will benefit from capital flows to stocks and stable currencies. “There’s only one safe asset left, which is gold,” said Bainbridge’s Michael Kelly, adding that government bonds can no longer fulfill their traditional role of moving against the direction of stocks. and high risk assets. Cautious optimism on Wall Street despite turmoil The S&P 500 index remains close to its record levels after the White House signaled that trade talks with China are on track, while strong results from several regional banks eased credit concerns in the financial sector. Goldman Sachs CEO David Solomon said that the series of losses in some… Regional banks that with fraud allegations are linked, remain “isolated incidents” that do not indicate a systemic crisis. He added in an interview with CNBC: “It’s interesting that we’ve seen three cases that appear to be completely separate, and they don’t constitute a general trend by any means.” Despite repeated warnings over the past six months, the S&P 500 continued its strong performance, recording one of the best … Periods since the 1950s. But this October gap suggests that some investors covered their short positions ahead of the Federal Reserve’s next interest rate decision on October 29. Victoria Greene of G Squared Private Wealth believes that “October was indeed a season full of surprises, but stocks remain resilient to an endless stream of negative news.” She added: “It’s natural to expect more volatility as we exit a period marked by unusually low volatility. Therefore, while concerns about high valuations and bad news are justified, we believe the bull market will continue to climb the ‘wall of worry’ on a positive note until the end of the year.” Pointing out that the months of November and December historically favor stocks, especially technology companies, Joe Tigay of the “Rational Equity Armor” fund said: “We may expect more for the Halloween year, but volatility is more the Halloween year. it looks encouraging.” Ed Yardeni, a veteran Wall Street analyst, said the drop in oil prices could push U.S. Treasury bond yields to levels not seen in more than a year. He expected 10-year bond yields to fall to 3.75% if oil prices continue to fall and the Federal Reserve cuts interest rates next week. Explain that the long-term relationship between assets is due to the impact of oil prices on inflation. He wrote in a research note: “The rising oil glut and fears of a global economic slowdown pushed US West Texas Intermediate crude prices to their lowest levels since the markets recovered from the Corona shock, which will help reduce inflation rates and improve consumer purchasing power.