
This week AMD, Amazon, and Apple will release their earnings reports. These tech giants will determine the future of the US stock market!
2022-12-29 • Updated
The economy is on the cusp of recession, suffering from high inflation and high interest rates. That eats up salaries, weakens consumer confidence, and may lead companies to layoffs. With all these tensions, stocks collapsed into a bear market.
US stocks have delivered their worst first half of a year in more than 50 years triggered by the Federal Reserve's attempt to control inflation and growing concerns about recession and global growth. So what's next for US stocks? Can they recover in the second half of 2022?
S&P 500 ended the first half of 2022 on a bad note, declining by more than 20.6%. Wall Street hasn't seen such a painful start since 1970, when stocks saw a strong sell-off in a recession that ended what had been, by far, the longest period of economic expansion in America's history.
The technology-heavy Nasdaq Composite has lost nearly 30% since 2022. The sharp drop in US stocks has wiped out more than $9 trillion from the market value since the end of 2021, according to Bloomberg data for the S&P 500 Index.
1. Inflation is the theme of the year, and its harsh consequences have already affected everything.
2. The Fed has been late and stubborn in responding to rising inflation despite all early signs that rising prices are not temporary and will persist.
3. The gloomy mood and negative atmosphere are currently dominating the market, with the growing possibility of a recession in the US and Europe.
4. Relying on central banks to facilitate monetary policy to support economic growth, their inability to tighten and hike rates at the right time, and their failure to control inflation.
5. The series of rate hikes were so quick and strong that they greatly confused the markets.
6. The Fed is insisting on continuing to raise rates to fight inflation despite the possible economic risks, even if it leads to a recession.
Stocks have struggled since falling into a bear market in June. History shows that the rapid pace of the market's decline this year may actually be a positive sign, with stocks poised for a rebound if the economy avoids a sharp slowdown or recession.
The good news is that the most recent bull market only took 161 days to go from its peak to a 20% decline, compared to the 245-day average in previous bear markets.
If the Fed avoids a recession as it did in the dot-com crisis (2000-2002) and the global crisis (2008-2009), this bear market could bottom out soon. How this bear market ends will depend on the pace at which inflation decreases, which will determine how long the Fed will keep raising rates and when it will stop.
If the Fed controls inflation over the coming months, markets will stabilize and calm. If the Fed fails, this bear market will be just the beginning.
With a soft landing scenario and stable earnings season, we expect the S&P 500 to end the year around the 3900-4200 levels. If corporate profits declined in the next two quarters and the economy entered a recession, the S&P 500 could drop below 3300.
This week AMD, Amazon, and Apple will release their earnings reports. These tech giants will determine the future of the US stock market!
Earnings season is a crucial time for investors and analysts, as it provides insights into how well companies have performed over the past quarter and gives indications of their future earnings. In 2023, expectations for US Q1 earnings were low due to economic challenges and rising interest rates. Surprisingly, many companies beat these low expectations, with 75% of S&P 500 companies surpassing forecasts.
Tesla, Netflix and Goldman Sachs will publish their earnings reports these week. Here is why you should follow.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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