US stock market crash may not be over yet

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This Thursday (19), shares fell again in the American market after the big sell-off on Wednesday (18).

The Dow ended the day down more than 235 points, or 0.8%, recovering only slightly from a drop of nearly 475 points earlier in the session. Blue chips are down 14% this year and hit a new 52-week low on Thursday morning.

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The S&P 500, which is perilously close to falling 20% ​​from its all-time high set on Jan. 3 and in a bear market, is down 0.6%. The Nasdaq, which is already in bearish territory, dropped 0.3%. The technology sector index is down 27% this year alone.

Prominent technology stocks were among the biggest losers in the market on Thursday after Dow component Cisco reported sales that missed forecasts and also gave a weak outlook. Cisco plummeted 14% on the news.

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Retail leaders Walmart and Target, which dragged Wall Street this week on disappointing prospects, were hit again on Thursday. And the news remains bad for other stocks in the sector.

But Kohl’s shares rose nearly 4% on Thursday in volatile trading, though the struggling chain reported a big loss in profits and cut its guidance.

The poor results of corporate leaders are also sounding the recession alarm. More experts are starting to predict a slowdown later this year or early 2023. The unease on Wall Street is palpable.

“What is the catalyst? What will make investors want to buy more and give them confidence in the market? I think there is nothing now,” said JJ Kinahan, chief market strategist at tastytrade.

The VIX, a measure of Wall Street’s volatility, is up more than 70% this year. And the CNN Business Fear & Greed Index, which looks at the VIX and six other measures of market sentiment, is showing signs of extreme fear.

“Investors must keep their seat belts fastened. This period of volatility is not likely to end,” said Tom Galvin, chief investment officer at City National Rochdale.

“There is a long list of uncertainties,” added Galvin, citing the Federal Reserve’s rate and inflation policy, concerns about further Covid outbreaks in China and Russia’s invasion of Ukraine as lingering concerns.

Galvin said investors would do well to avoid speculative tech stocks and European equities due to concerns about excessive valuations and a possible economic slowdown. Instead, he recommends quality blue chip stocks that pay steady dividends.

Investors may also be getting nervous about how the market turmoil is hurting big hedge funds and other institutional investment firms.

A prominent hedge fund, Melvin Capital, announced plans to close after betting against bullish meme stocks like GameStop in 2021 and making ill-timed purchases of travel stocks this year.

Traders have been taking advantage of risky moment tech stocks, bitcoin and other cryptocurrencies and other investments that could benefit from an economic recovery.

“There’s definitely more fear and nervousness,” said Dan Pipitone, CEO and co-founder of TradeZero. “The cryptocurrency crash is also having an impact. There is a wait and see approach. People are sitting on the sidelines waiting for a clear direction on where we are going.”

Instead, investors are now flocking to stocks perceived as better hedges and, in some cases, beneficiaries of inflation and rising interest rates.

Case in point? Oil stocks are the big market winners this year. Chevron, up more than 40%, is Dow’s top stock, and is one of the four biggest holdings in Warren Buffett’s Berkshire Hathaway, which is beating the market this year.

Berkshire is also a big investor in Occidental Petroleum, which has more than doubled this year and is a top performer in the S&P 500.

Source: CNN Brasil

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