Wall Street stocks finished lower on Wednesday (Jun 13) after the Federal Reserve lifted interest rates and signalled a more aggressive pace of additional hikes amid a strengthening economy.
Stocks were also pressured by revived trade war fears on a report that President Donald Trump’s administration would proceed with tariffs on Chinese goods.
The Dow Jones Industrial Average dropped 119.53 points (0.47 per cent) to 25,201.20.
The broad-based S&P 500 shed 11.22 points (0.40 per cent) to 2,775.63, while the tech-rich Nasdaq Composite Index dipped 8.09 points (0.11 per cent) to 7,695.70, retreating from Tuesday’s record.
In addition to lifting benchmark interest rates to a range of 1.75-2.0 per cent, which was predictable, the Fed released interest rate projections that implied two more rate hikes instead of one in 2018 and four rate hikes in 2019 instead of three.
The FOMC statement stressed that rising interest rates were unlikely to derail economic growth – which the committee now characterised as “strong” rather than “moderate,” an upbeat appraisal maintained by Fed Chair Jerome Powell during a news conference.
At roughly the same time as the Fed declarement, the Wall Street Journal stated that the Trump administration intends to proceed with a plan to impose tariffs on tens of billions of dollars of Chinese goods, a move predictable to prompt retaliatory measures from China.
Boeing and Caterpillar, two blue-chip companies with noteworthyoperations in China, both lost around two per cent.
Media stocks were among the biggest movers following a US judicial decision that cleared the way for the US$85 billion merger of wireless and broadband giant AT&T with media-entertainment conglomerate Time Warner.
The court’s rejection of the Justice Department’s antitrust challenge to the AT&T deal was seen as easing the pathway for additional media consolidation.
Twenty-First Century Fox, which has a deal to sell key assets to Disney, suggesting the market anticipates a bidding war over the assets.
Comcast, which shed 0.2 per cent during the session, declared after the closing bell that it was offering US$65 billion for the Fox assets, topping Disney’s bid. [AFP/ec]
Hot Stock Analysis: Ritchie Bros. Auctioneers Incorporated (NYSE: RBA)
Investors rushed to trade on Ritchie Bros. Auctioneers Incorporated (NYSE: RBA) Wednesday, soon after a drastic change of -0.28% in the share price was observed and the stock become able to close its trade at $35.59. The stock becomes active when traders or investors changed hands with 580,881 shares contrast to the three-month volume average of 428.74K shares. The ratio between current volume and 3-month average value, also known as Relative volume was observed at 1.35, validating the stock’s In Play state.
Stock Technical’s & Performances to Explore:
Based on a recent bid, this stock (RBA) was trading at a distance of -1.14% from 52-week high and 47.83% away from its 52-week low price. We observed 0.65% rate of return for a stock for the last 5-trading days, which was maintained for the month at 7.78%. Likewise, the performance for the quarter was recorded as 8.41% and for the year was 11.32%. The comparison of these above mentioned historical values gives an idea to investor whether the stock is ready to shift trend (up to down or down to up) or how the stock has recovered the losses or shed gains during its historical phase. For example, if stock’s weekly and monthly performances are positive as compared to year and YTD performance percentage also seems to decrease in comparison to the previous year performance, then one can say that the stock is bouncing back and may able to gain more and more in near future and vice versa. Although stock’s historical performances are key to consider, don’t invest (or not invest) based solely on it. It’s just one measure of value. As a serious shareholder, you need to look at plentiful factors that can assist you determine whether any given stock is a good investment.
Simple Moving Averages (SMAs) in Focus:
Moving averages is one of the key indicator and the most powerful tool used by traders. A simple moving average is easy to calculate, which allows it to be employed fairly quickly and easily. A textbook definition of a moving average is an average price for a security using a specified time period. The simplest form of a moving average, appropriately known as a simple moving average (SMA), is calculated by taking the arithmetic mean of a given set of values. For example, to calculate a basic 10-day moving average you would add up the closing prices from the past 10 days and then divide the result by 10. If a trader wishes to see a 50-day average instead, the same type of calculation would be made, but it would include the prices over the past 50 days and the same process goes on for 200 days.
Do SMAs Signal a Trend Reversal?
Based on a recent bid, this stock (RBA) was trading at a distance of 4.17% from 20 days simple moving average, and its distance from 50 days simple moving average is 6.49% while it has a distance of 15.45% from the 200 days simple moving average. A moving average’s greatest strength is its ability to assist a trader identifies a current trend or spots a possible trend reversal. Moving averages can also identify a level of support or resistance for the security, or act as a simple entry or exit signal.
Stock’s Volatility Analysis:
Volatility is the degree of variation of a trading price series over time as measured by the standard deviation of logarithmic returns. It generally deals with the amount of uncertainty or risk about the size of changes in a security’s value. It can either be calculated by means of the standard deviation or variance between returns from that same security or market index. The Rule of thumb is higher the volatility, the riskier the security. A higher volatility means that a security’s value can potentially be spread out over a larger range of values. This means that the price of the security can change dramatically over a short time period in either direction. A lower volatility means that a security’s value does not fluctuate dramatically, but changes in value at a steady pace over a period of time.
What about RBA Stock’s Volatility?
According to finviz data, RBA stock’s volatility for the week is measured at 1.41%, while for the month it is maintained at 1.58%.
An Eye on Beta Factor:
One gauge of the relative volatility of a specific stock to the market is its beta. A beta approximates the overall volatility of a security’s returns against the returns of a relevant benchmark (usually the S&P 500 is used). Presently, Beta factor for RBA stock stands at 0.66. A beta of 1 indicates that the security’s price moves with the market. A beta of less than 1 means that the security is theoretically less volatile than the market. A beta of greater than 1 indicates that the security’s price is theoretically more volatile than the market. For example, if a stock’s beta is 1.2, it’s theoretically 20% more volatile than the market. Conversely, if an ETF’s beta is 0.65, it is theoretically 35% less volatile than the market. Therefore, the fund’s excess return is predictable to underperform the benchmark by 35% in up markets and outperform by 35% during down markets.
What Do Analysts’ Recommend?
Analysts mean recommendation for the stock is 2.80, (where 1 is Strong Buy and 5 is Strong Sell).
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