ONLINE FOREX BROKER
2022-11-22 • Updated
The stock market has reversed, and now it’s going lower and lower. What to expect? Let’s try to look through this situation for stocks and indices trading.
Nasdaq (US100) and S&P 500 (US500), the major US stock indices, have lost roughly 12% to 25% this year. After two years of gains, it’s a painful drop. Now that the S&P 500 tested levels below 4050, the downside risk is 3800, or even 3600. A drop to 3800 would mean a loss of 21.18% since the beginning of the year.
The decline of the S&P 500 is mainly due to interest rates hikes. The rates are now at higher levels than the bank expected just a couple of months ago. Investors expect the Fed to raise the interest rate by another 100 basis points this summer.
Economic growth slowed, contracting 1.4% in the first quarter, and stocks have been hurt as tech and growth stocks continue to reprice in a new, more hawkish Fed policy.
According to a JPMorgan strategist, stock markets in the US and Europe estimate a 70% chance that the economy will slide into recession in the near future.
Recession warnings have sounded for months this year amid the war in Ukraine, coronavirus lockdowns in China, and a more hawkish Fed policy. Worries that policymakers' efforts to curb inflation will send the economy into recession have led investors to take nearly $10 trillion out of US stock markets this year.
While signs of a weakening economy are everywhere, it remains difficult to detect that a definite recession is approaching. Manufacturing and service activities haven’t reached their peak but are still expanding, consumers continue to spend, and employment and housing data are at the normal level.
If recession fears don’t materialize, restrained stock positioning and the reversal of the pessimistic sentiment will help the stock market recover.
According to analysts, similarly high chances of a recession have historically indicated further capital losses when a recession materializes. However, stocks tend to rise when the worst doesn't happen: the S&P 500 jumped 12% over the next 12 months. Analysts estimate that the market will be poised for an economic downturn and earnings recession if the S&P 500 falls below 3800.
Now analysts see valuations drop even further before the unpleasant decrease in the stock market ends, and earnings results will likely disappoint through 2022.
The S&P 500 had a good week due to the impressive start of Q1 earnings and favorable inflation data. In March, the consumer price index rose 5%, lower than the previous month's 6%, and met economists' expectations.
FAANG stocks started recovering. Which ones are the best according to fundamental analysis?
The previous year 2022, was undoubtedly tumultuous for the stock markets, with several stocks plummeting across multiple industries. Analysts have blamed the hard times on inflation, hawkish federal reserve policies, an impending global recession, and the ongoing crisis in Ukraine. This year, however, we're beginning to see some recovery in the stock markets. This article will find a few stocks worth buying this year.
Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.
Hey guys, this is the last full trading week in May, and many forward-looking individuals like myself are already preparing themselves to seize whatever opportunities June may have in store. On this note, I will review a few commodities that have satisfied my quest for swing-trading opportunities in the coming month. Follow me!
The Bank of England (BoE) has dramatically shifted its economic forecasts. They no longer expect a recession in the UK and have upgraded their growth projections. This year, the BoE predicts GDP growth of +0.25%, a significant improvement from previous expectations. Next year's forecast is even more optimistic, with a projected growth of 0.75%.
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