Market Update – Page 30 – Digital Finance Analytics (DFA) Blog

No FED Put For You, Or You…!

Wall Street’s three major indexes closed lower on Tuesday, following a rally last week, as volatile oil markets kept soaring inflation in focus and investors reacted to hawkish comments from a Federal Reserve official.

The Dow Jones Industrial Average fell 0.67%, to 32,991, the S&P 500 lost 0.63%, to 4,132.15 and the Nasdaq Composite dropped 0.41%, to 12,081.39.
All three indexes had rallied last week to snap a decades-long losing streak. With Tuesday’s decline, the S&P and the Dow were essentially unchanged for May. The Nasdaq showed a monthly decline of 2%.

And Inflation in the Eurozone surged to a new record high in May, piling more pressure on the European Central Bank to end its money-printing and bring its key interest rates back above zero. Preliminary figures from Eurostat showed consumer price inflation rose to 8.1% in the 12 months through May, up from 7.4% in April.

So, markets should not look for a quick change of direction from Central Banks.

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Warnings That Shook The Markets!

The S&P 500 and the Nasdaq finished in the red on Tuesday as worries that aggressive moves to curb decades-high inflation might tip the U.S. economy into recession dampened investors’ risk appetite.

All three major U.S. stock indexes pared their losses in afternoon trading, with the blue-chip Dow turning positive. Even so, the S&P 500 ended just 2.2 percentage points above confirming it has been in a bear market since reaching its all-time high on Jan. 3.

The Dow Jones Industrial Average rose 0.15%, to 31,928.62; the S&P 500 lost 0.81%, to 3,941.48; and the Nasdaq Composite dropped 2.35%, to 11,264.45. The volatility index rose 3.41% to 29.45.

Six of the 11 major sectors of the S&P 500 ended the session in negative territory, with communication services and consumer discretionary suffering the biggest percentage losses.

“As we step back and acknowledge the primary market catalysts, it’s really been about the Fed pivot and the change in interest rates, which have influenced prices across the capital markets,” said Bill Northey, senior investment director at U.S. Bank Wealth Management in Helena, Montana.
“In the last two weeks, we’ve seen some degree of macroeconomic deterioration starting to be manifested in corporate earnings and economic releases.”

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Banking On A Relief Rally!

U.S. stocks ended higher on Monday as gains from banks and a rebound in market-leading tech shares supported a broad-based rally following Wall Street’s longest streak of weekly declines since the dotcom bust more than 20 years ago.

Interest rate-sensitive banks jumped 5.1% after the largest U.S. lender, JPMorgan Chase & Co raised its current year interest income outlook. JPMorgan Chase’s stock surged 6.2%.

“It feels like a relief rally more than a fundamental change in investor sentiments,” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “Investors as a whole feel like there’s another shoe to drop and they’re probably right in the short term.”

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Planned Wealth Destruction Continues…

In this week’s market review, we see the negative moves now compounding as the bears remain in charge, emboldened by fresh statements for Central Banks about the need to tackle rampant inflation, and even confirming that falling markets ARE PART OF THE PLAN.

As usual we start with the US markets, as it really sets the tone for global trends, cover Europe, Asia and Australia as well as crypto and commodities.

In fact on Friday US stocks pulled back from session lows after the S&P 500 dipped 20 per cent below its January 3 closing record. 20% of course is defined as bear territory. Treasuries and the dollar gained as havens caught bids. The NASDAQ is however already over that line by some margin, and we can expect more falls ahead.

Afterall, the US consumer is deeply negative. “While many cross-currents are causing the current sell-off, the proximate cause of the recent acceleration in the stock declines revolves around fears about the U.S. consumer,” Glenview Trust CIO Bill Stone wrote. “For the first time in the post-Covid period, retailers have been stuck with some excess inventories. Costs due to inflation are also taking their toll on their earnings.” “Lastly, there is evidence that the lower-end consumer is feeling the pinch from the increase in prices,” Stone said.

The sell-off has led to increasing warnings of stagflation and to Wall Street strategists cutting their S&P 500 targets. It has also led to investors scrambling to find places to hide during the downturn.

And At the end of another volatile week, price swings were likely to be exacerbated by the monthly expiration of options tied to equities and exchange-traded funds.

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The Bears Are In Charge…

The latest from the markets show the bears are running the show. It is not pretty.

The latest edition of our finance and property news digest with a distinctively Australian flavour.

Go to the Walk The World Universe at https://walktheworld.com.au/

The Whipsaw Market Weekly Update [Podcast]

The latest edition of our finance and property news digest with a distinctively Australian flavour.

In our weekly review, we reflect on a chaotic week in the markets, from stocks, to crypto, even as stocks rallied at the end of the week in financial markets thanks to Federal Reserve Chair Jerome Powell’s reassurance that bigger rate hikes would be off the table for now even after the hot inflation readings of the past few days. Separate comments from San Francisco Federal Reserve president Mary Daly also backed half-percentage point rate increases at each of the central bank’s next two meetings. There is a clue to why we are seeing so much craziness.

After sinking almost 20% from a record and flirting with a bear market, the S&P 500 saw a broad-based rally on Friday. It still posted a sixth straight week of declines — the longest losing streak since June 2011. The NASDAQ 100 outperformed amid a rally in giants like Apple Inc., Microsoft Corp. and Amazon.com Inc.

Meanwhile, Elon Musk caused chaos over his takeover offer for Twitter Inc., first claiming his bid was “temporarily on hold” and then maintaining he’s “still committed” to the deal — sending the social-media giant into a tailspin. Tesla Inc. jumped. Treasuries fell with the dollar.

Despite the strong gains on Friday, many traders aren’t yet convinced that equities have reached a bottom after a selloff that shaved $10 trillion from US stock values in 18 weeks. Instead, they say investors should still brace for volatility as the Fed’s ability to fight price pressures without causing a hard landing may depend on factors outside the central bank’s control. Frankly forecasting is a mess.

Back in January, stock strategists known for their enduring optimism expected the S&P 500 to add 5% in 2022.Bond strategists weren’t any more prescient. Interest rate strategists and economists were calling for 10-year Treasury rates to rise to 2% by June. Yields took out that level in early February and have touched 3.2% this month.

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Digital Finance Analytics (DFA) Blog

The Whipsaw Market Weekly Update [Podcast]

00:00 / 00:29:17

Leaky Boats – After A Bruising April: May May? [Podcasts]

In this week’s market review we look at the action around the world, starting in the US, Europe Asia and Australia, and looking at Gold, Oil and Crypto in passing.

The news is not good, for those believing in a return to Bull markets, supported by a Fed Put. Actually, with inflation running hard, Central Banks will lift rates, and as yet markets are not fully pricing the risks of this change. Why would they, as there are many who profit from transaction, any transactions, so of course they are talking their book. Hope that the Fed can lift rates to counter persistently high inflation without tipping the US economy into a recession are fading, further fraying market sentiment.

CONTENTS

0:00 Start
00:15 Introduction
1:00 Earning Season
1:50 Sentiment Surveys
2:54 US Growth and PCE
5:57 US Markets
9:20 Monetary Policy
12:50 Oil
13:15 Gold
16:10 Silver
18:20 UK Home Values
21:08 Europe
22:27 Asia
25:35 Australia
28:25 Crypto
30:29 Conclusion And Close

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog

Leaky Boats - After A Bruising April: May May? [Podcasts]

00:00 / 00:31:48

Leaky Boats – After A Bruising April: May May?

In this week’s market review we look at the action around the world, starting in the US, Europe Asia and Australia, and looking at Gold, Oil and Crypto in passing.

CONTENTS

Go to the Walk The World Universe at https://walktheworld.com.au/

A Tradeable Bounce Within A Down Trend?

Our latest weekly market update, and what is really going on.

All three major US benchmarks surged higher into the close, with the S&P 500 and the NASDAQ recording their best weeks since November 2020.

Equity transactions spiked at the open as the expiry of stocks and index options collided with that of index futures in a quarterly event known as triple witching. Roughly $US3.5 trillion of single-stock and index-level options were estimated to expire Friday, so the market is likely distorted by these technical issues. This triple witching — when stock options, stock index futures, and index option contracts expire on the same day — usually triggers wild moves as investors move out of old positions and take new ones.

Growth sectors of the market like tech were also helped by falling interest rates even as Fed officials urged the central bank to do even more.

The rally in the broader market has stoked debate on whether this is the start of a bottoming process, or further downside lies ahead.

Market technicians, however, urge caution on reading too much into the rally as options expiry tends to muddy market movements. Technical indicators including volumes and market breadth have yet to improve significantly to signal that the market is establishing a bottom.

Go to the Walk The World Universe at https://walktheworld.com.au/