TWeak consumer spending data, heightened concerns about recession, and the S&P 500 fell into the cruelest conditions in the first half of the year. Therefore, the selling of stock prices deepened. Since Richard Nixon's presidency.
This is a history book defeat, with the benchmark gauge dropping 21% in the first six months of the year. This was the most common in such a period since 1970. The US 10-year yield plummeted from a 10-year high of 3.5% in mid-June to about 3%. The dollar was the best quarter since 2016. Nearly 60% drawdown ofBitcoinsince the end of March was the largest since the third quarter of 2011.
US consumer spendingfell for the first time this year, thinking earlier in's rapid inflationand the Federal Reserve's rise. It suggests a slightly weaker economy than it was. There is a view that the central bankhas misjudged inflation and has disrupted the market and needs to act swiftly.
"The stagflation that currently dominates our country will tighten the stock market in the medium term," said Matt Marie, chief market strategist at Miratavac. "If demand is not the main reason inflation is a problem, then a recession will not help lower inflation, as some experts think."
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Major segments of the world's largest bond market 5-year and 10-year yields It shows the bet that the economy will worsen as interest rates rise because the difference between the two is reversed. According to data compiled by Bloomberg, the reversal generally precedes the recession by about 6-18 months.
According to Greg Marcus, Managing Director of UBS Private Wealth Management, July will be marketed during corporate earnings, key inflation data, and federal meetings after a rough first half of the year. Will be crucial to the future direction of. He states that volatility will probably remain high until there is evidence that inflation has eased, the risk of recession has receded, and geopolitical threats have diminished.
Over the past few months, a strategy that has worked well for 10 years has hit new lows in the market. Traders have avoided the "buy" mantra while adopting the "sell" mode. As a result, the S&P 500 entered the bear marketfor the second time since 2020, plummeting by more than 20% from its January peak.
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But what's the disastrous performance? Does not indicate if The US equity benchmark lost 21% in the first half of 1970 during a period of high inflation compared to the current environment. It increased by 27% during the last 6 months of the year.
"We have double-digit returns from now to the end of the year," Jonathan Gorab, Head of US Equity Strategy at Credit Suisse, told Bloomberg Television. "It's not as profitable as people say."
Earlier this week, Goldman Sachs Group strategists said U.S. profit margin estimates were too optimistic and Wall Street analysts expected. He pointed out that if it is lowered, there is a risk that the stock price will fall further. Morgan Stanley's Lisa Charlett said Monday's analysts need to confirm the reality of this quarter's earnings forecast.
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Elsewhere,Oilwas hit by the first monthly slide since November as OPEC + completed the return of production that had stopped during the pandemic. .. Gold has fallen for the third straight month.
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