Using history as a guide, many pundits have already speculated that when the US stock markets reopen they will immediately spike lower, as this is the usual response to cataclysmic events. While Briefing.com concedes that this is the most likely market response, we don't think it will happen.
To the contrary, Briefing.com expects to see a "patriotic" rally unfold over the next few weeks, as traders will be loath to profit off the terrorist attacks by shorting stocks. We also suspect that the US Treasury and the Fed will be jawboning major corporations to support their stock prices in order to prevent a major psychological break in the financial markets. Coordinated rate cuts and major fiscal stimulus plans will also provide support to the fragile market.
How far, and for how long, such a patriotic rally will carry the market, we don't know. But in the days and weeks to come, as the markets reopen, and as the weight of events gradually lifts from our hearts and minds, Briefing.com will work to identify which sectors and stocks will outperform.
Robert Walberg
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