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March is expected volatile for the indices
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Loading...March roared in like a lion on steroids, fitting for the month that marks the eighth anniversary of the second longest bull market in history.
Jumping on the reflation trade, stocks rallied hard, smashing records across the board Wednesday and setting up for further gains. That's thanks in part to a boost from President Donald Trump, who offered few details before Congress on Tuesday night but provided enough encouragement for markets to believe he will scuttle regulation and bring about tax reform and fiscal stimulus. It was also due to the fact that Fed officials are actively talking about the potential for a March rate hike, which is adding fuel to the gains in financial stocks.
Trading in the rest of the month may not be quite as buoyant, and there are plenty of macro risks for the market, as well as catalysts. There is a Federal Open Market Committee meeting, ahead of which Fed officials have been suggesting a rate hike is on the table.
One of the first events of March is the heavily oversubscribed Snap IPO, which priced at $17 per share and would value the Snapchat company at about $24 billion. It is the first big tech IPO since Alibaba went public in 2014, and it is expected to begin trading on Thursday.
"In the recent past, these high-profile tech sector IPOs have been hit or miss," said John Canally, economist and market strategist at LPL Financial. "This particular one is coming at a time when the market already is at an all-time high. … It may lead to a situation where individual investors feel like they're being left out.
The Dow started March by breaking through another large, round number — 21,000, just 24 trading days after breaking 20,000. That is the fastest century run for the Dow since 1999 when it also gained 1,000 points in 24 days, but from a much lower level of 10,000.
It signals much the same as what breaking 20K meant…these highs will get more publicity and that will drive greater participation in markets, especially from retail investors, who still hold too much cash.
March is busy with major events for markets, like the Chinese National People's Congress starting Monday. Some traders are looking to see if economic forecasts for China have been lowered and could therefore impact commodities markets. There are also meetings March 9 of the European Central Bank and EU leaders, who may hear the official word from British Prime Minister Theresa May that the U.K. is leaving the euro zone.
The upcoming French election in April could generate some noise to ruffle markets in March, and there is also the Dutch election March 15, where until recently a populist candidate looked set to win. The French election would provide most risk for the euro zone if nationalist candidate Marine Le Pen were to win. Le Pen has vowed to move France off the euro, but for now she is not seen as the likely winner.
Another factor traders will focus on this month is the endurance of the bull market itself.
Bank of America Merrill Lynch analysts Wednesday raised their year-end target on the SP500 to 2,450 from 2,300 for year end. Their reasoning was not as bullish as it sounds. The analysts said the raised their target because they see an end coming for the bull market.
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