July 2, 2022

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S&P 500 confirms bear market as recession anxiety grows

S&P 500 confirms bear market as recession anxiety grows

  • Expectations of a 75 basis point rise in June
  • Wall Street’s fear gauge rises to a one-month high
  • The Standard & Poor’s 500 hit its lowest level since March 2021

NEW YORK (Reuters) – U.S. stocks fell on Monday, with the Standard & Poor’s 500 confirming it was in a bear market, as fears grew that expected large interest rate increases by the Federal Reserve would push the economy into recession.

The benchmark Standard & Poor’s index has fallen for four consecutive days, with the index now down more than 20% from its record closing high to confirm that a bear market began on January 3, according to a commonly used definition.

All major S&P sectors fell sharply, with only about 10 components of the S&P 500 in positive territory on the day. Markets have been under pressure this year with higher prices, including a jump in oil prices due to the war in Ukraine, which put the Federal Reserve on the right track to take aggressive measures to tighten its monetary policy, such as raising interest rates.

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The Federal Reserve is due to make its next policy announcement on Wednesday, and investors will be focused heavily on any evidence of how seriously the central bank is raising interest rates. Read more

Heavyweights in the high-growth market such as Apple Inc (AAPL.O)Microsoft Corporation (MSFT.O) and Amazon.com Inc (AMZN.O) The biggest drawback was the S&P 500, with the 10-year US Treasury yielding 3.44%, the highest since April 2011. Growth stocks are likely to see their earnings suffer in a price environment.

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A higher-than-expected CPI reading on Friday prompted traders to price a total of 175 basis points in rate hikes by September.

Goldman Sachs said late Monday it expects increases of 75 basis points in June and July. Expectations for a 75 basis point lift at the June meeting jumped to 96% late Monday from 30% earlier today, according to CME. Fedwatch.

“The market has been trying to get around the idea that inflation has peaked, and that the Fed is not going to be any stronger,” said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.

“This story broke down on Friday with the CPI report, which showed broad inflation taking hold everywhere you look.”

According to preliminary data, the S&P 500 . index (.SPX) Lost 149.91 points by 3.85% to close at 3750.95 points, while the Nasdaq Composite lost (nineteenth) It lost 526.82 points, or 4.65%, to 10,813.20 points. Dow Jones Industrial Average (.DJI) It fell 857.70 points, or 2.73%, to 30,535.09.

Bear Markets S&P 500

In addition, the 10-year US Treasury yield curve has briefly inverted for the first time since April, which many in the markets see as a reliable signal that a recession may come in the next year or two. Read more

Nasdaq Composite Index (nineteenth)which suffered its fourth consecutive decline, confirmed that it was in bear market territory on March 7 and has fallen by about 30% this year.

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CBOE Volatility Index (.VIX), also known as the Wall Street Fear Barometer, reached its highest level since May. However, many analysts see the level as weak and could mean more selling pressure in the store.

“This is a market that doesn’t seem to be giving up as much as it is frustrating,” said Rob Haworth, chief investment analyst at US Bank Wealth Management in Seattle.

“Even with some of the securities being dumped, it’s not deep enough, and violent enough to see people have taken their positions.

for 2022

Stocks Related to Cryptocurrency and Blockchain, Including Riot Blockchain (RIOT.O)Digital Holdings Marathon (Marao) and Coinbase Global (COIN.O)All slumped with bitcoin down more than 10% after US crypto lender Celsius Network froze withdrawals and transfers due to “extreme” conditions.

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Additional reporting by Louis Kroscoff, Stephen Kolb and Noel Randwich; Edited by Aurora Ellis

Our criteria: Thomson Reuters Trust Principles.