Don’t be fooled by the stock market’s manic Monday moves, some market participants caution.
A jump by the Dow Jones Industrial Average DJIA, -0.46%[1] the S&P 500 index SPX, -0.21%[2] and the Nasdaq Composite Index COMP, -1.16%[3] in early trade has investors hoping that a withering rout that has played out since early October may be coming to an end. Stocks came off those early highs[4], with traders blaming hard-to-shake worries about global growth.
For the month, the Dow is on track to shed 6% of its value, the S&P 500 is off 4.7% and the Nasdaq, which has lost 10% from a recent peak, putting it in correction territory, is down 10.3% so far this month, according to FactSet data.
The cautious optimism may come with good reason, markets in Europe rose sharply Monday. And International Business Machines Corp.’s IBM, -3.13%[5] planned acquisition of Red Hat Inc. RHT, +45.20%[6] in a deal valued at $33 billion, may suggest that Wall Street still views the current atmosphere as one conducive to deal making, despite the selloff in the market that has been led by technology and internet names and threatens to leave the three main indexes with their worst October since 2008.
Still, a number of pundits say that prudence is warranted.
Related: Why finding the low in this stock selloff ‘is going to feel awful, like it always does’[7]
“I don’t think we’re quite settled down yet,” veteran trader Art Cashin, UBS director of floor operations said on CNBC late-morning Monday.
Read: Opinion[8] : 5 reasons to buy stocks now—and 5 reasons to run from the market[9]
Jesse Colombo, economic analyst and registered investment adviser at Houston-based Clarity Financial had this to say: “People are getting excited about today’s market bounce. Stop…just stop. This bounce means absolutely nothing. Last week’s important technical breakdown is still intact:
People are getting excited about today's market bounce. Stop...just stop. This bounce means...