By coinnews 
00:00 Speaker A
US stock futures are trading lower right now after the major averages saw two consecutive days of gains, but Wall Street strategists say the sell-off has more room to run as the downside for catalyst for stocks that remain. Joining us now from more is Yahoo Finance Markets reporter, Josh Shafer here, and a lot of questions just about have we seen the brunt of the selling subside, and what’s the data telling us right now?
00:24 Josh Shafer
Yeah, Brad, so we’ve had about a 3% pop in the S&P 500 right over the last two sessions, but I think the thing that stands out and what strategists were talking about is what actually changed about the story to drive this narrative. Not much, right? A lot of people are arguing stocks were oversold, so at some point, maybe you hit some technical levels, maybe some incremental buyers come in. But I think when you look at the fundamental story that sort of brought us here and brought us to this drawdown, I don’t think it changed that much. I want to bring up a chart that was in Bank of America’s fund manager survey that you guys were just talking about. This, of course, a survey of investors, so it sort of gives us an idea of what’s top of mind for investors. Well, what was top of mind for investors from a risk perspective during that drawdown? It was the trade war, right? So the trade war, global recession was the top risk listed by investors, then you had inflation causes Fed to hike as another risk. Do sparks the US recession, new political conflicts, AI bubble, all of these listed as potential risks to the market as we’re selling off. I haven’t seen anything in the last week that gave me any sort of confidence that any of those risks look any better, right?
02:14 Speaker B
Well, it’s interesting because obviously we seen these two days of dip buying and the question that we wanted to pose to you is whether or not that’s a sign of a rebound to the upside that’s going to be long lasting or if this is just something a little bit temporary here. And to your point, we do have news that Jameson Greer, who’s going to be running the tariff side of things, is going to try to have some more policy clarity, and I think that maybe that gives investors a little bit of confidence, but we haven’t seen proof of that yet. That’s just reporting indicating that clarity. So is that going to be enough when to your point over half of those fund managers say that the trade war is the biggest risk to equities right now?
03:07 Josh Shafer
I think the the point here, guys, we’re talking about a sustainable rally too, right? Like a rally back to record highs. So a double digit rally, that needs some sort of fundamental backing. People don’t just wake up and buy stocks to buy stocks, right? You buy stocks because you think in the long run corporate profits are going to move higher. It’s a bet on earnings, it’s a bet on the overall US economy here, right? Like that’s why you would buy stocks. You need something that makes you feel more confident in that story. Based on what investors are saying about risk, it’s probably more certainty on the tariffs, right? So then we can understand.
04:02 Speaker B
So what so what is what is this two days of of gains that we’re seeing? They’re obviously reversing in the trade so far this morning. What do you think has been driving that?
04:12 Josh Shafer
I mean, I think you look at some of the stocks that bounced back, it really was just the stocks that got hit the most, right? So if Palantir shaves off 50% of its value over a one month period and then it pops last Friday, kind of just makes sense a little bit, right? That stock would still have to rally 100% to get you back to where it was at the record at the most recent 52 week highs, right? So you’re just seeing a little bit of nibbling at some of the bigger names, some of the more popular names that got fully unwound, but I don’t think you’re seeing actual confidence in the growth story. One final thing that I want to point out is just normally people would argue that the end of a correction and when you start to move higher comes on some sort of news event, right? You think back to last August when we had that growth scare, when did we really rally back when we had a report on initial jobless claims on unemployment filings that was better than feared, right? So less people were filing, that gave you confidence in the growth story. It gave people a reason to come back in and buy stocks. Maybe it’s the Fed tomorrow, maybe there’s something that Powell says that gives people a little more confidence. Maybe it’s something from Trump, maybe it’s not until next month when we get to earning season, but you need a little bit more of actual something to chew on.
05:46 Speaker A
You know, for the technological side of the trade here too, let’s remember and in different dramatic shifts that we’ve seen in technological advancements in the past, there have been long periods of sideways trading, especially if you move from the period that it is all hype, then proves to be a show me story over an extended period of time. You can point back to the.com, you can point back to even the cloud craze that took place earlier on where everyone was saying, okay, all we need to do is make sure that they know we have a cloud solution. Well, you still have a long run period of time after that hype phase where companies had to grow into those valuations. And so that might in the backdrop be also what we’re seeing start to play out as well here early.
06:55 Josh Shafer
Yeah, where when does the show me story kind of happen, right? And I know you guys talk to a lot of tech strategists about that. There’s not a lot of people arguing that you’re going to see crazy profits from AI this quarter, right? It’s probably end of 2025 into 2026. But what are those companies going to start saying about that process as we move forward? I think it’s going to be the key, Brad. I appreciate it.
07:31 Speaker A
All right, guys, thank you so much, Josh. Thank you for joining us. Appreciate it.