U.S. stocks issued a stark warning to Wall Street’s death squads on Monday (26th), as stocks continued to dip, bearish sentiment was far from dissipated, and the actions of global hawkish central banks were unsettling for a recession-filled market.
existGBPWith the devaluation at a record low and commodity prices pressured by the dollar’s strength,S&P 500 IndexIt fell to its lowest level since December 2020 on Monday (26th) and is down nearly 8% this month.10-Year U.S. Treasury YieldIt climbed to 3.898%, a new high in more than 12 years.
The trend of global central banks to raise interest rates has made risk assets continue to create tragic records, but monetary policy officials in Europe and the United States have yet to help. Ned Davis Research now sees a 98% chance of a global recession. Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, also warned that optimists who are bullish on corporate earnings performance are like sleepwalkers walking on the edge of a cliff.
Bad news is spreading around the world, and selling pressure is mounting on stocks, which had their worst performance since 2008.
“Unfortunately, it’s just a must, because the market has to price in whether the Fed will stop,” said Stephanie Lang, chief investment officer at Homrich Berg. “Looking ahead, if we don’t fall into a recession, we will soon. , so the market still has room to fall.”
at the same time,GBPThe collapse in British government bonds has dented global risk appetite and heightened fears of a looming collapse in financial markets, while central banks in Europe and the United States are still emphasizing their determination to fight inflation.S&P 500 IndexTechnology stocks were hit hard, with the Russell 2000 index, which represents small-cap stocks, down 1.4 percent, falling for a fifth straight session.
Fears of slowing economic growth have persisted for months, but early signs of weakness in industrial sentiment and the U.S. housing market have investors worried that things are deteriorating rapidly.
Ned Davis Research’s global recession probability model recently rose above 98%, triggering a severe recession signal. The company said that the aforementioned model had previously reached such high levels in 2020 and 2008-2009, a period of severe downturn, suggesting that at some point in 2023, the risk of a global recession will rise further , which in turn brings more downside to global stock markets.
More than 400 S&P 500 stocks closed lower on Monday, and nearly all sectors closed in the dark, with housing, energy and utilities all down more than 2 percent. The S&P 500 has been below its 200-day moving average for more than 100 days, the longest streak since 2008.
Shalett said signs of an economic slowdown, including the housing market, suggest that once investors realize that Fed policy has fallen behind, the days of retribution will follow.
She believes that the current bear market is not over, and if investors continue to underestimate the impact of the rapid rise in interest rates, there may be more unexpected negative news ahead.
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