Stocks have been under pressure since the start of the year, as investors dumped stocks over concerns about the Federal Reserve’s ability to control inflation without causing a recession. The fallout from the war in Ukraine and the potential for a slowdown in China due to rising COVID-19 cases are adding to the concern.
Market reaction: Stocks: Dow Jones down 1.35%, S&P 500 down 1.62%, Nasdaq down 2.23%.
Tom Martin, Senior Portfolio Manager, GLOBALTINVESTMENTS, Atlanta
“The most important time in the market is usually the last hour of trading. I would say more that if we continue to close lower in this last hour, it probably does not bode well. But if we have had a rally in the last hour with the intervention of buyers, it gives some hope” .
“The market is cumulatively absorbing last week’s news, especially retail trading results, causing many of these stocks to fall.”
“Consumer sentiment is definitely quite negative. And when you tie it to the investor position in the market, there is too much money with exposure to the markets we want to reduce, and hedge funds are reducing their overall exposure. They can, and should hedge their short positions, but obviously selling short Long positions crush any short cover.”
“So as people adjust to that, they look at where that bottom is, and you know, it seems like the consensus before today was that we weren’t there yet. Now the question is if that leads us to that level of market support that could at least be a bottom. Tentatively before we can get some sort of equilibrium is an open question, you know, people are looking at things like VIX which, while high today, are still below levels associated with market lows in the past.”
“Although the market reacted poorly, they did not react to the extent that they, on average, responded to recession environments before. So there is still some way to go if we are really going to go into a recession and we have an average market drop associated with that Much will depend on the actual course of inflation and what the Fed does, among other things, such as the war in Ukraine, COVID policy in China, etc. There is still a high level of uncertainty. And you don’t know if we’ve bottomed out enough to be There is a rise in the opposite direction.”
Brian Jacobsen, Senior Investment Strategist, All International Investments, Menomoney Falls, Wisconsin
“We have to see if we close these levels or not, but investors are clearly afraid of a recession. Corrections are driven by inflation, recession and geopolitics concerns. We have a third-party winner now. Whether we stay at these levels or whether we go down depends on whether Fears materialize or not.Reports from major retailers increase perceived chances of the next recession, but I’m not convinced that these are warning signs.More stimulus from China or perhaps more stable Inflation printed on Friday from the PCE price index could help provide floor”.
Kim Forrest, Chief Investment Officer, Bouquet Capital Partners, Pittsburgh
“It’s a watermark but it’s relatively insignificant. Could it go down? Yes, of course.”
“Reaching and holding this level and not pulling back may give investors the confidence to buy.”
“Investors are looking at worst case scenarios…so all of this geopolitical stuff could drive us lower. However, the rate cut in China today gave us a positive opening. And that’s something we, if you’re a long-term investor, you need to take into account. Caution because a rate cut in China could make the Fed less aggressive for fear of an excessively strong dollar.”
“A higher interest rate environment requires lower multipliers. That’s what we’ve done by lowering the equity multiplier…if that pressure eases, we may start looking at companies again.”
Paul Nolte, Portfolio Manager, KINGSVIEW INVESTMENT MANAGEMENT, Chicago
“If we don’t do it today, it will be Monday. In all the trades that have been in the last two weeks, there hasn’t been a rebound really. And any bounce we’ve done has gone too far quickly” So we’re going to be in a bear market today, maybe next week. It is more imperative than anything. It’s clear, certainly with what happened to the Nasdaq and smaller companies. It’s no surprise that S&P is finally there.
“I don’t think investors are selling because we’re in a bear market now. They’ve been selling all the time. The question is always what the Fed does. Historically, they’ve come to the rescue of the market. We’re not sure of Powell’s position this time – or whether there’s one…on the Even though they raised rates twice, we haven’t really seen any impact in the economy outside of the housing sector.”
Randy Frederick, Vice President of Commerce and Product Delivery, Charles Schwab, Austin, Texas
“Looks like we’re finally going to hit a bear market in the S&P 500, which to me is the last straw because you’re really in a bear market, and you need to close below 3836, and we’re below that level now. Now we might have one of those rally late in the day Like we have sometimes, so that might not happen.”
“But one thing that doesn’t really seem to line up when it comes to walking away, or giving up, is true with VIX. Thirty-two VIX isn’t low, it’s historically high, but it doesn’t line up at all. It’s not at all what you often see when everyone throws in the towel, I’m sold Indiscriminately, I’m tired, just trying to salvage what’s left of me, that kind of thinking. Who-that’.
“Usually you’ll need to see something over 40 and sometimes it’s much higher. If you go back to the bear market for COVID in early 2020, it’s about 80, so there’s nothing close to it. I think we’re going into a bear market, whether it happens. That day or early next week, I’m not sure, but I’m not sure. I’m not convinced we’re still at the bottom, simply because.”
“Now there is no need to have one of those days, but it often happens, we can go into a slow, continuous downtrend, which frankly has been going on since day two of this year. Although it wouldn’t be bad at all once, it’s like slowly taking the bandage off. ‘It’s going to be long and slow and agonizing and frankly, it could take months I don’t know. Without this huge and gigantic spike in volatility and that sense of surrender, you hesitate to make predictions that we’ve hit rock bottom.'”