Investors show preference for safe-haven assets including the dollar and U.S. government bonds
The S&P 500 and the Dow Jones Industrial Average on Friday ended their worst weeks since 2020, with major indicators expanding the whipsaw movement that has created new market volatility.
The S&P 500 rose 8.07 points a day, or 0.2%, to 3674.84, while the Nasdaq Composite gained 152.25 points, or 1.4%, to 10798.35. The Dow dropped by 38.29 points, or 0.1%, to 29888.78.
All three ended the week at a great loss. The S&P 500 fell 5.8% per week, its biggest decline since the Covid epidemic hit markets in March 2020. The Dow fell 4.8% a week, its biggest decline since October 2020.
The crypto market that once was hot and had a crazy week, reinforces investors ’concern that there is no hiding place in the current market crisis. One of the largest crypto lending platforms, Celsius Network LLC, told customers on Sunday that it was suspending all withdrawals. Anxiety quickly spread throughout the sector throughout the week. Companies like Coinbase have announced massive reductions and prices for bitcoin and other cryptocurrencies are declining.
Markets of all lines face a dilemma. High inflation over the decades has plagued consumers, and investors are wondering if big banks like the Federal Reserve could do much to counteract this and end up ruining the economy. The Fed signed this week that it will continue to raise inflation rapidly over decades, which could put a strain on the stock market.
The S&P 500 entered the bear market on Monday and continued to fall on Tuesday. Shares rose Wednesday after the Fed announced its sharp rise in interest rates since 1994, and then postponed a study on Thursday as investors debated the reality of continued inflation.
“The big question is, ‘Will the Fed be strong enough to cause the recession?’ That’s what the stock market is trying to reduce,” said Jay Willoughby, chief investment officer at TIFF Investment Management.
All 11 sectors within the S&P 500 fell by at least 15% from its recent highs, while seven in the bear market area. The winners on Friday were customer service and consumer choice, with power and resources lagging behind.
The latest level rises to defuse the previous cycle of monetary policy relaxation which has allowed the prices of both stocks and bonds to meet in recent years. Prospects for repeated rate increases throughout the year have sparked fears that rapid consolidation could slow growth. U.S. housing price level has recently reached its peak of more than 13 years. Recent economic data has shown a sharp decline in key sectors.
Hani Redha, portfolio manager at PineBridge Investments, said inflation was likely to rise sharply in the coming months as electricity prices continued to rise.
“The big banks, which have been our friends for a very long time, tell us that we should expect pain,” he said. Redha. “That inflation rate is the only major one right now. Even if we see growth slower, that will not be enough to make the Fed change course. “
Tech shares are rising. Twitter added 42 cents, or 1.1%, to $ 37.78; Meta Platforms earned $ 2.87, or 1.8%, to $ 163.74; and Microsoft improved by $ 2.68, or 1.1%, to $ 247.65.
“Are we facing a recession or a continuing recession? And that is still uncertain, ”said Michelle Cluver, portfolio strategist at Global X.
Brent crude, the international oil price index, fell by $ 6.69, or 5.6%, to $ 113.12 a barrel. Moscow’s move to reduce natural gas exports to Europe this week has put the continent’s energy crisis into a dangerous new phase that threatens to spill essential oil and turn the continent’s economy afloat. In the U.S. trade, Diamondback Energy, Devon Energy and ConocoPhillips have all dropped by more than 8%.
Signs remained that investors were looking for assets that were considered safe, such as the US dollar and US government bonds. The WSJ Dollar Index, which measures the greenback against the 16-dollar basket, rose 0.9%. In bond markets, yields on the Treasury’s 10-year benchmark declined to 3.238%. Yields decline as prices increase.
“We are close to the bottom,” said Josh Emanuel, chief investment officer at Wilshire Funds Management. He said equity and bond markets already had a high level of economic and financial risk. The firm of Mr. Emanuel has reduced exposure to long-term bonds and equities in recent lows.
The value of bitcoin and other cryptocurrencies have shown soft signs of recovery after a sharp fall over the past 10 days.
Overseas, the pan-continental Stoxx Europe 600 added less than 0.1%.
In Asia, the Bank of Japan maintained very low interest rates on Friday, confirming that it would not join the Federal Reserve and other major international banks in tightening monetary policy. Japan stock index Nikkei 225 dropped 1.8%.
The South Korean Army fell 0.4%, while China’s Shanghai Composite added 1%.