The summer sell-off is finally here - and not all U.S. investors are rattled by it
NEW YORK - .
Meanwhile, frustrated long-term investors who have been waiting for an entry point into a U.S. stock market whose trailing price to earnings ratio of 20.1 is well above its historical average, are pouncing. They are adding to their portfolios in anticipation that further rate cuts by the Federal Reserve or a resumption of trade talks this fall could send the U.S. market on an upward path once again.
“We’ve been on the sidelines and today we’re actively taking new positions in stocks that have more than adequately factored in worries about the trade tariffs and currency fluctuations,” he said.The market’s latest steep losses are reminiscent of August 2015 when an unexpected Chinese currency devaluation sent shockwaves through global markets.
A weaker yuan allows China to offset some of the pressure from tariffs on its exports, which U.S. President Donald Trump unexpectedly said on Thursday he would increase by imposing an additional 10% levy on $300 billion worth of Chinese goods effective Sept. 1. Since then, the S&P 500 has declined by approximately 5%, while the yield on the benchmark 10-year Treasury fell to its lowest level since before the 2016 U.S. elections.
Market strategists, meanwhile, are becoming increasingly worried that a slowing U.S. economy will put pressure on stock market valuations, leaving the broad market to stall.
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