Mixed Earnings, Surging Yields, and Macro Uncertainties Weigh on Markets
US stocks ended up lower once again in October, with the S&P 500 and Dow dropping by 2.1% and 1.3%, respectively, while the technology-heavy Nasdaq lagged, losing 2.8%.
US stocks ended up lower once again in October, with the S&P 500 and Dow dropping by 2.1% and 1.3%, respectively, while the technology-heavy Nasdaq lagged, losing 2.8%.
Summary: US stocks ended September with their biggest monthly decline since last December 2022, with the S&P 500 and Dow dropping by 4.8% and 3.4%, respectively, while the technology-heavy Nasdaq lagged by losing 5.8%. The expectation of "higher for longer" interest rates put pressure on markets. With a hawkish hold in September's FOMC meeting and hawkish commentary from several Fed policymakers, investors are worried that a pivot toward lower rates will not happen any time soon. The US long-term interest rates surged due to the uncertainty in the macro landscape.
Summary: Stocks retreated in August, with the S&P 500 declining by 1.6%, while the Dow and the technology-heavy Nasdaq both lost more than 2%. Despite the generally positive economic data in the US, there have been challenges recently, partly due to the upswing in long-term yields. Also, corporates delivered soft Q2 earnings growth, reflecting a decrease in demand and softening pricing power with persistent margin pressure.
Equity Markets Still Under Pressure from Rising Interest Rates
Equity markets were under selling pressure in December, fighting headwinds from rising interest rates and a looming economic downturn. The S&P 500 finished the month down 5.8%, and the Dow lost 4.1%. The tech-heavy Nasdaq lagged significantly, losing 8.7% for the month. Within the S&P 500, the typically defensive sectors, including health care, utilities, and consumer staples fared best, while weakness in Tesla weighed heavily on the consumer discretionary sector.
Fed Signals Slower Rate Hikes, Easing Inflation and Boosting Markets
Equity markets gained in November with signals that the Fed might slow its pace of interest hikes and a slew of better-than-expected earnings reports in the retail and technology sectors. Stocks saw broad gains on the last trading day of the month, with the S&P finishing the month up about 5.6%. The Dow gained 6%, while the tech-heavy Nasdaq lagged slightly, adding 4.5% for the month.
Markets Rebound, Macro Headwinds and Earnings Uncertainty |
Inflation Frustration and Recession Obsession
The Fed’s Inflation Battle Continues
Weak Growth and Elevated Inflation
After a poor start to the year, markets continued to sell off throughout the second quarter of 2022. A respite in May was followed by downwards momentum in June, with all major equity indexes logging steep declines for the month. Both the S&P 500 and Nasdaq dropped more than 8%, while the Dow lost 6.7% in June.