It’s a bumpy, volatile, not-so-good, very bad market out there. Stocks, bonds, commodities, currencies, and futures have fluctuated wildly from day to day — and there could be more to come
The index fell to a three-month low this week, down 4.6%. Growth stocks are hit hardest because
slip 5.1%. The
ended the week down 4.0% – the lowest close of 2022 and on top of a bear market, down 19.6% from its all-time high.
Big moves are not exclusive to the stock market. Federal Reserve interest rate hike Wednesday, and its hawkish forecasts, sent the two-year Treasury yield to a new 15-year high, at 4.21%, as prices fell. Oil hits lowest level since January on Friday, at $78.74 per barrelreflect concerns about the global economy.
Currency markets were also mixed. The
ended the week up 3%, boosted by Fed actions. On Thursdays, the Japanese yen 2% spike against the dollar – a big one-day move for a major currency – after the country’s Finance Ministry said it would intervene to support the yen for the first time since 1998. Monetary strategists call the planned intervention a short-term remedy, preferably .
Not to be outdone, the British pound 3.5% off against the dollar on Friday, to a 37-year low below $1.09. The drop comes after the newly formed UK government announced its economic plan, which includes spending cuts and higher taxes, while also requiring more debt and bond issuance. than.
It’s hard to see the chaos end soon. Next week brings little news on market movements — the personal consumption expenditures price index will be the highlight of economic data, along with earnings from
(code: NKE) and
(MU) —ahead of the six-week period is probably too much.
The first two weeks of October will bring the September jobs and inflation reports; third-quarter earnings season will pick up. Management commentary on the future will be key. The first week of November includes the Fed meeting and October employment figures; then there are midterm elections and October inflation figures are due next week.
Making things harder: The futures market is still battling the Fed, pricing in the top federal funds rate in early 2023 and cutting it later that year. That contrasts with officials’ stated plan to pause and wait for the tighter policy to take effect. In other words, there is room for market valuations to become increasingly hawkish and for yields to rise further.
A drop below the S&P 500’s June low of 3,667 points could be in the cards. Several European and Asian indices broke the bottom of the 2022 trading range this past week. And it can be a bumpy road: Historic October sees a 1% single-day gain or fall in the S&P 500 of any given month, according to Bespoke Investment Group, followed by November.
December could be better. It’s been a strong seasonal month for markets, and if the monthly inflation readings dip towards year-end, there won’t be any more hawkish surprises from the Fed. Stocks also tend to do worse the year before the recession than when the recession hits, which means the market could begin to recover, even as the economic pain mounts.
However, don’t look too far ahead. We have to get over what’s coming first.
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