(Reuters) - U.S. stock markets were set to resume falls at opening on Tuesday after both the S&P 500 and the Dow Jones Industrial Average slumped more than 4 percent in the previous session, the biggest falls in more than six years.
The slide, driven by a rise in government bond yields which has undermined faith in an almost decade-long market rally, has knocked more than $1.5 trillion off U.S. stock values since Thursday.
Following are comments from analysts and investors ahead of U.S. market open at 9.30 et (1430 GMT).
LORI CALVASINA, HEAD OF U.S. EQUITY STRATEGY, RBC CAPITAL MARKETS
“We have not sensed panic among equity investors, but nervousness had been building for the past few weeks. In retrospect, a pullback may have been overdue.
“Daily drops of 3 percent or more have been buying opportunities for the S&P 500 post financial crisis. While the sharp decline ... on Monday was unnerving, it is important to keep (that) in mind.”
ANDRE BAKHOS, MANAGING DIRECTOR AT NEW VINES CAPITAL LLC IN BERNARDSVILLE, NEW JERSEY
“The one thing I could say with confidence is that volatility has suddenly come back into the market.
“The declines in markets are steep and vicious and are fostering a feeling of fear which begets irrational behavior. So this market is now driven on fear of rates and wages. That basically means good news now is bad news.
“The volatility has caused investors to be fast on their feet. It is a true traders’ atmosphere as opposed to the conditions we have been accustomed to - buy and go higher.”
RICK MECKLER, PRESIDENT, LIBERTYVIEW CAPITAL MANAGEMENT, JERSEY CITY
“At some point this morning you’ll see it set some new recent lows, but I do think there are buyers at these levels and I think you’ll see some buying come in during the day and maybe not lead to some quick rebound here but provide stability.
“You also have a surrounding environment with bitcoin and other things that are showing individual levels of volatility as well, so interest rates hitting new recent highs, when you are up this high, I think there is an emotional component, the percentage drops aren’t so unique but when you translate them into points you know it has an emotional impact on investors.”
“We think this is a technically-driven correction that can potentially reverse quickly, rather than being the start of a protracted downturn based on recession fears. In the fullness of time we believe this will be viewed as a buying opportunity and so we are actively looking into avenues of interest.
“We have certainly had a few turbulent trading days. ... Risk appetite has collapsed in very short order. In terms of sequencing, selling pressure originated in bond markets which then spilled over into equities, commodities and most recently credit. U.S. bonds have been front and center of the weakness, but closely followed by other developed bond markets too. Software-dominated trading strategies seem to be exacerbating recent moves.”
SCOTT BROWN, CHIEF ECONOMIST AT RAYMOND JAMES IN ST. PETERSBURG, FLORIDA
“Is it deepening again today? It is hard to say. A lot of people were surprised by yesterday’s action. The sharp drop in the afternoon seemed to be mainly programmed trading.
“These kinds of corrections are a normal process. Where the bottom is I don’t know but the fundamentals haven’t changed.
“They may try to regroup in the morning but the last hour of trading is going to be really important.
“When you look at past market declines, a lot of the selling was based on everybody else selling and that’s the thing that is hard to get a handle on.”
Reporting by Shounak Dasgupta, Yashaswini Swamynathan, Tanya Agrawal and Patrick Graham in Bengaluru