The U.S. stock market plummeted to a eight-week low in the Asian session on Wednesday after which S&P 500 index bounced back up to the 1640 level that is has now become its resistance. This upward move was witnessed as a result of a bullish correction that came on time and as well as the increased share prices of energy sector companies as the tensions rise in Syria.
The U.S. military forces are almost ready to raid Syria in order to eradicate the culprits who are using chemical weapons and also to overthrow Assad’s regime from Syria, and this could take the form of missile attacks at any time.
This in turn is resulting in the speculation that the oil production would halt and the supply would distract, hence it has already taken the oil prices up drastically while gold is also getting a chance to shine.
On the other hand, the uncertainty remains there as to whether the FED would be announcing the tapering decision in September or not because the market is reacting towards the U.S. economic indicators instantly. The pending home sales for the U.S contracted by 1.3% which now shows a bit of disappointment and sluggishness in the housing sector all of a sudden.
The S&P 500 index closed at the 1629 level that is below its support levels, hence indicating the market is bearish and sellers are ready to ride the market. Moreover, it has been a tradition that when September starts, the U.S. dollar starts getting stronger while the stock market loses badly. For instance, the 2008 financial crisis is the best recent example for this that occurred due to a bubble in the sub-prime mortgages.
Provided this military action against Syria takes place, it could cause unwanted circumstances for a number of stock markets and as well as different companies’ share prices. Tesla which is just 10-years old has now become a $20 billion dollar firm, while Apple is set to launch its new iPhone in September too.
Much is happening in Telecommunication and the I.T sector companies where they are expecting good increment in their share prices, which may not happen due to this war scenario. On the other hand, the energy sector companies may get to savor with increased share prices due to concerns in oil production and supply.
This in turn would cause the automobile industry to slow down because fuel prices would rise which would mean that the complementary product would become expensive so less people would be willing to buy cars and ride.
To contact the reporter of this story: Jonathan Millet at email@example.com