Why Has ArcelorMittal Stock Seen A Double-Digit Drop In A Month?

ArcelorMittal stock (NYSE: MT) has dropped more than 12% in the last one month and currently trades at $29 per share. The sharp decline in the stock was driven by the recent weakness in global steel and iron ore prices. The fall in prices was mainly due to lower imports by China following its move to control steel production to meet carbon emission norms. Secondly, China’s second biggest property company – Evergrande – recently announced that it is finding it difficult to sell off assets quickly enough to repay its mounting debt load. This announcement led to fear about the prospect of defaults and a domino-effect crash through China’s housing market. This would, in turn, have a severe adverse impact on steel and iron ore demand. But will ArcelorMittal’s stock continue its downward trajectory over the coming weeks, or is a recovery in the stock more likely?

According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for MT stock are likely to average close to 2% in the next one-month (21 trading days) period after experiencing a 12% drop over the previous one-month (21 trading days) period. Also, there is a 53% chance of the stock giving positive returns over the next one month. But how would these numbers change if you are interested in holding MT stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test ArcelorMittal Stock Price Forecast after a rise or a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day! For additional details about ArcelorMittal’s performance, refer to the analysis ArcelorMittal (MT) stock.

MACHINE LEARNING ENGINE – try it yourself:

IF MT stock moved by -5% over five trading days, THEN over the next 21 trading days, MT stock moves an average of 1.5%, with a 52% probability of positive return over the next one month.

Some Fun Scenarios, FAQs & Making Sense of MT Stock Movements:

Q1: Is the price forecast for Arcelor Mittal stock higher after a drop?

Answer:

Consider two situations,

Case 1: Arcelor Mittal stock drops by -5% or more in a week

Case 2: Arcelor Mittal stock rises by 5% or more in a week

Is the price forecast for Arcelor Mittal stock higher over the subsequent month after Case 1 or Case 2?

MT stock fares better after Case 1, with an expected return of 1.5% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an expected return of 0.7% for Case 2. This implies a price forecast of $29.37 in Case 1 and a figure of $29.13 in Case 2 using MT market price of $28.93 on 10/11/2021.

In comparison, the S&P 500 has an expected return of 3.1% over the next 21 trading days under Case 1, and an expected return of just 0.5% for Case 2 as detailed in our dashboard that details the expected return for the S&P 500 after a rise or drop.

Try the Trefis machine learning engine above to see for yourself how the forecast for Arcelor Mittal stock is likely to changes after any specific gain or loss over a period.

Q2: Does patience pay?

Answer:

If you buy and hold Arcelor Mittal stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For MT stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

Q3: What about the stock price forecast after a rise if you wait for a while?

Answer:

The expected return after a rise is understandably lower than after a drop as detailed in Q1. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

MT stock returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Arcelor Mittal stock by changing the inputs in the charts above.

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