Key points:
- The Vanguard Stock Market ETF (VTI) stock price is up 5.27% in a week.
- However, this does not mean that the downtrend in US stocks is over.
- VTI needs to keep rising and breaking above the resistance zones below.
The Vanguard Total Stock Market Index Fund ETF (NYSEARCA: VTI) stock price has risen 5.27% in the past week after bottoming at $182 in mid-June. The rebound in VTI coincided with a rebound in the overall stock market and has left many wondering whether this is the end of the stock market selloff.
Unfortunately, we are not yet in a position to say that the stock market selloff is over. The fundamental factors have not changed drastically as the US is still experiencing record-high inflation, and the Federal Reserve is keen to keep raising interest rates until inflation cools.
Also read: What Are Exchange Traded Funds (ETFs)?
Many experts still expect the Fed to raise rates by 75 basis points at its July meeting, with another rate hike planned for September. However, at this point, the Fed is expected to take its foot off the rate-hiking momentum and back off before the US economy enters a full recession.
The Fed is currently downplaying the increasing likelihood of a full-blown recession in the US despite most indicators pointing to a looming recession if the Fed does not stop raising rates.
However, those who follow the Fed know that Fed Chair Jerome Powell kept saying that the rising inflation witnessed in the US last year was just transitory, despite experts warning that the central bank’s easy money policies were creating uncontrollable inflation.
Therefore, I wouldn’t be surprised to see the US enter a recession before the Fed finally admits that raising rates while consumer spending is cooling and the world is experiencing record-high energy and food prices combined with massive supply-chain disruptions is not a good idea.
Getting back to the markets, I don’t think this is the end of the downtrend in US stocks. Instead, I think there is more pain in store for investors. However, the bearish thesis will be invalidated if VTI keeps rising over the coming weeks and break above the resistance zones plotted on the daily chart below as they head towards their 2021 highs.
*This is not investment advice. Always do your due diligence before making investment decisions.
VTI stock price.
The VTI stock price rallied 5.27% in the past week. So is the stock market selloff over?