Wall: S&P 500 in bear market – Dow down 500 points, ‘sees’ historic negative record for the week

LAST UPDATE: 20.35

Wall enters deeper into the “red” on Friday, after the initial gains – which reached + 1% for the Nasdaq – and the mild losses until the middle of the session, the key indicators of the American market now record strong losses, with the S&P 500 to move to bear market, after diving more than 20% from its historic high on January 3, 2022.

Friday’s negative signs extend the weekly losses for all three indices to 3% or more each. The Dow is preparing for the eighth consecutive week of losses, which will be the biggest negative streak since April 1932, according to FactSet.

The S&P 500 and Nasdaq are heading for their worst negative streaks since June 2011 and November 2012, respectively. Losses that reflect strong concern about whether the Federal Reserve can curb inflation without derailing the economic recovery.

The recession in the US can not be considered unlikely, as Goldman Sachs points out, with its customers constantly asking what to expect from shares in the event of such a scenario for the economy. Its economists estimate a 35% chance that the US economy will enter recession in the next two years and believe that the yield curve bodes well for a similar contraction.

Stock market indicators suggest that investors are worried about the risk of a recession. The rotation within the US stock market shows that investors are pricing higher chances of recession compared to the strength of recent financial data.

The initial boost in the US market came from the strong session in the Asian stock markets, after the decision of the People’s Bank of China to reduce its interest rates. In particular, the country’s central bank decided to reduce the interest rate on five-year loans by 15 basis points, to 4.45% from 4.6%, in a move to stimulate growth, as it will help reduce the cost of financing for companies in difficulty. The one-year loan interest rate remained unchanged.

Asia-Pacific stock exchanges capitalized on this move today, with Hang Seng in Hong Kong trading 2.9% and Shanghai Composite in mainland China adding 1.9%. In Japan, the Nikkei 225 gained 1.3% and the Kospi in South Korea gained 1.8%.

In the meantime, his performance 10-year US government bond falls by 12 basis points to 2.833 %%, while the dollar gains 0.3% according to the ICE US Dollar index, however it is heading towards losses of 1.5% per week.

Indicators – Statistics

On the dashboard, the industrial Dow Jones falls by 1.6% or 500 points to 30,755 points, the widest S&P 500 loses 1.85% to 3,828 points and the technological Nasdaq records losses of 2.45% at 11,110 points.

The S&P 500 is about 20.7% below its all-time high and has entered the bear market, its first since the era of the sell-off of the beginning of the pandemic, in March 2020.

Of the 30 Dow Jones shares, 6 are positive and 24 are negative. The profits are led by Merck with an increase of 0.7%, while the biggest losses are recorded by Boeing (-7.1%) and Caterpillar (-5.5%), Intel (-3.75%) and 3M (-3.2%).

Shares of Ross Stores are sinking 24% after the retailer announced disappointing quarterly results and narrowed its outlook due to persistently high inflation and rising costs in transportation and wages.

Losses of 13.7% for Deere & Co., although the company manufacturing agricultural, construction and forestry machinery announced better-than-expected profits and revenue for the second quarter.