Equities Bounce Back After Midweek Sell-Off

 | May 19, 2017 07:54AM ET

It’s been one of the quieter days of the week so far in terms of major news flow or economic data and yet, equities are anything but flat as we near the US open, with the events of the previous days continuing to have an impact.h3 Trump distraction fades as markets bounce back from midweek sell-off/h3

Wednesday’s sell-off in equity markets got many people worried about whether the political circus in the US was finally starting to take its toll on investor appetite at the near-record levels. What we’ve seen since though would clearly suggest otherwise and instead indicate that the moves two days ago were nothing more than a combination of the usual Trump distraction combined with technical levels giving way.

The distraction is obviously undesirable, especially if it develops into anything more, but as it is investors appear relatively confident that it will pass, leaving the administration to focus on the policies that are largely responsible for markets being at these levels, tax reform and spending. The last few months has been something of a waiting game for investors as we await further news on taxes and fiscal stimulus, leaving the S&P and Dow bouncing around between 2,320 and 2,405, and 20,350 and 21,170, respectively. Only a break below here would suggest to me that investors are losing confidence.