How long will the positive correction last?

Positive correction recovers the downfall losses but the bear trend still lingers

How long will the positive correction last?

Stocks showed a 6.6%. recovery from the bear market territory by Friday, May 25, as investors added about $20 billion to global stocks in the week of May 13-20, capping a strong week that marked the first weekly gain for the S&P 500 in two months.

After a steep selloff on recession concerns, cheaper valuations lured investors leading to the Dow gaining 5.9%, the S&P 500 gaining 6.6%, and the Nasdaq gaining 6.8% by the close of the third decade of May

A number of retailers such as Macy’s, and Nordstrom reported better-than-expected quarterly outcomes. Macy’s, Dollar General, and Dollar Tree all saw stocks surge after raising annual profit forecasts.

Energy stocks rallied as oil prices rose last week. Marathon Oil jumped more than 4%, Diamondback Energy rose about 2% and Devon Energy gained more than 1%.

Citigroup Inc. strategists were recommending stepping back into stocks, particularly in Europe and emerging markets, on their appealing valuations, while cutting their recommendation on US stocks to neutral.

Still, experts remain divided. “The world is repricing for the top of terribly low rates of interest and terribly accommodative financial coverage,” stated David Lefkowitz, head of equities for the Americas at UBS International Wealth Administration to the New York Times.

"Summer rally bandwagon is growing,” Bank of America strategists led by Michael Hartnett wrote in a note to Bloomberg. “We fade rallies, but not in a rush.”

Investors are keeping a close eye on the Fed’s June and July meetings while picking up a little more optimism. Traders anticipate the Fed to lift its benchmark borrowing fee to as high as 2 % by July, which by no means will be the final raise anticipated this 12 months. The upper borrowing prices imply investors and traders may have to reconsider what they are willing to pay for shares and the level of risk premium to put on them.

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