Why the Dow plunged more than 1,000 points? Should I wait for stocks to sink lower? Here’s what some pros think.


What a difference it makes one day.

Finished the best Dow Jones Industrial Average DJIA earnings percentage,
-3.12%
since November 9, 2020, the blue-chip index has skyrocketed, along with the rest of the stock market, including the S&P 500 SPX,
-3.56%
and the Nasdaq Composite COMP,
-4.99%.

Not even U.S. Treasury bills were safe, with the 10-year Treasury note TMUBMUSD10Y,
3.083%
rising above 3% as prices fall.

Some experts attributed Wednesday’s rally to a statement from Federal Reserve Chairman Jerome Powell that a 75 basis point increase was not being actively considered by central bank policymakers at upcoming meetings.

The statement came after the Fed released its first half-percentage-point rise in interest rates on Wednesday, as had been widely expected since 2000 in the last months of President Bill Clinton’s second term. .

The Fed has raised rates to combat rising inflation that materialized as a result of the closures and dislocations of COVID-19, and which has been exacerbated by the bloody conflict in Ukraine following the invasion of Russia in late February.

Some industry observers point to Thursday’s sale in part for fear that inflation will continue to haunt the economy in the U.S. and elsewhere in the world.

Thursday’s data showed that the productivity of American workers and companies sank at an annual rate of 7.5% in the first quarter, marking the largest drop since 1947, amid a shortage of supply and production bottle necks.

“It was a setback for our Roaring 2020 scenario of a technology-driven productivity growth boom that offset chronic labor shortages,” according to Yardeni Research, an investment strategy provider founded by Ed Yardeni, a MarketWatch contributor.

Meanwhile, Greg Bassuk, CEO of AXS Investments in New York, said the day’s action reflects “a continuation of the high-volatility 2022 roller coaster market, with the strong spiral downward from this session deleting yesterday ‘s earnings “.

Bassuk told MarketWatch that “investors are selling today with renewed concerns about the sheer amount of ongoing uncertainty.”

AXS CEO noted tensions with China, Russia’s siege of Ukraine, as well as a mix of business gains and persistent concerns about COVID-19 preventing a more powerful recovery in some parts of the world.

I’ll see: China-focused ETFs are collapsing as Blinken reports that China is the main rival in the United States.

Fears of the recession and worries about inflation have been at the heart of the current bearish attack on Wall Street. “There is no doubt that inflation, rising rates and volatility will continue to characterize the market environment in [the second quarter] and beyond, “Bassuk said.

“What’s really interesting about these markets is that there are these changes every two days in any direction where investors are outrageously bullish or outrageously bearish the next day,” said Sylvia Jablonski, CEO of Defiance. ETFs in New York.

In fact, Bill Watts of MarketWatch wrote that, with the exception of 2020, the S&P 500 has already exceeded or is on track to surpass annual moving averages of 2% or more for each year since 2011.

Reads: About four months for stocks: The S&P 500 is the worst start to a year since 1939. That’s what professionals say you should do now.

Jablonski said there was still room for hope.

“Inflation may have peaked, growth may be slowing, but it’s still positive. Consumers are still spending, [and] employment is at an all-time high, ”he said, noting that the excess savings of up to $ 2 trillion are said to have accumulated during the pandemic.

Market Extra (July 2021): US wealth grew by $ 19 trillion during the pandemic, but especially for the very rich

The volatile state of the market is fueling confusion about the outlook. Is it time to jump on the bandwagon or should investors expect a better entry point? Or should we heed the advice of billionaire investor Paul Tudor Jones and stay away from traditional markets?

History suggests that the market cannot be timed and that, for a long time, the market wins. The big question is what is your time period, what is your pain tolerance?

Falling bonds, with rising yields as prices fall, are complicating matters for some investors. Treasurys, in particular the 10-year U.S. government benchmark TMUBMUSD10Y,
3.083%,
They have traditionally been seen as a haven in times of uncertainty, but they have also been undone by the Fed’s current rate hike plan, which has led to bonds being sold in hopes of richer yields.

Also read: “The long bullish bond race has come to an end,” says Scott Minerd of the Guggenheim.

And check: The dollar soars as the Bank of England’s forecast forecasts investors to sell Treasury bonds and shares



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