US stocks stabilize after previous session's hefty losses

Haresh Menghani FXStreet

After a minor bounce during opening trade, major US equity indices drifted back into negative territory and built on previous session's sharp losses led by the latest political turmoil in the US.

Investors continue to unwind their bullish bets as escalating political uncertainty is now seen as a key hurdle for the passage of the US President Donald Trump's aggressive pro-growth economic policies.

At the time of writing, the Dow Jones Industrial Average was around 30-points to 20,575, while the broader S&P 500 Index was nearly unchanged at 2,357. Meanwhile, tech-heavy Nasdaq Composite Index seems to find support from dip buying and traded with gains of over 10-points to 6,022.

Today's early recovery attempt could also be attributed to upbeat US economic data, showing initial weekly jobless claims unexpectedly fell by 4K and Philly Fed Manufacturing Index jumped to a 10-month high level of 38.8 in May.

Investors' sentiment, however, would continue to be driven by any fresh news on the recent political developments. With a sharp up-surge in the volatility Index (VIX), pointing to lack of appetite for riskier assets, markets are unlikely to witness any sharp relief rally, at least in the near-term.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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