Stock futures point to more pain as inflation fears rage


0
Advertisements
Placeholder while article actions load

It’s shaping up to be another day of pain for Wall Street, with the Dow sliding 450 points in morning trading as investors continue to agitate over rising costs that are weighing down businesses and consumers.

A day after suffering its worst drop of the year, the Dow gave up nearly 1.5 percent shortly after the opening bell, while the S&P 500 slid 1.1 percent. The tech-heavy Nasdaq slid 0.8 percent.

The S&P 500 is within striking distance of a bear market — defined as coming down 20 percent or more from a recent peak — after Wednesday’s sell-off wiped out more than 4 percent off its value in its worst performance since 2020. The broad index has already suffered through its worst first four months of the year since 1939, and the outlook isn’t looking much better.

Earnings season has brought worrying news for investors, with weak performances from Target and Walmart serving as catalysts for Wednesday’s sell-off. The retail giants both reported soaring fuel and compensation expenses and growing evidence that consumers are starting to cut back, and each endured their worst day of trading in decades.

The panic spread to other retailers, with competitors Costco, Dollar General and Dollar Tree racking up double-digit losses Wednesday. More retailers are due to report Thursday including Kohl’s, BJ’s Wholesale and Ross Stores.

“The extent of the impact of inflation on these giants of American retailing has woken investors up, once again, to the huge impact surging prices are having on every facet of the economy,” Russ Mould, investment director at AJ Bell, said in commentary Thursday. Combined with hints from the Federal Reserve about more aggressive interest rate hikes, “and it’s little wonder that stagflation fears — a slowing economy combined with inflation running hot — are stalking the markets once more.”

The shaky retail performances bring a new dynamic to the sea of volatility investors have had to navigate in 2022, including war in Ukraine and its myriad consequences, supply chain headaches, roaring inflation and the ongoing challenges of the pandemic.

Now it seems that outlooks are darkening: JPMorgan said Wednesday that the market is pricing in a 70 percent chance of near-term recession, suggesting investors lack confidence that the Fed can rein in inflation without triggering some kind of a downturn.

“The outcome of the Fed’s actions is totally unpredictable, which is why markets are so volatile,” Ryan Belanger, managing principal of Claro Advisors, said in commentary Thursday. Belanger said he expects the market to trade “near or in bear market territory for the coming months.”

“It appears that we are headed toward a recession in the second half of 2023,” Belanger said, “when the current tailwinds of a strong consumer and solid corporate financial strength potentially give way to higher interest rates and a declining wealth effect.”

In times like these, “investors should become accustomed to significant downside and upside moves in stocks,” which is common in periods of uncertainty.

As it stands, the S&P 500 is down more than 18 percent for the year, and the Dow is down nearly 14 percent. The Nasdaq, which has been heavily battered as investors rotated away from pricey tech stocks, is down nearly 28 percent for the year, well into its own bear market.

Unease was reflected in bond markets, an investor safe haven in times of turmoil. The yield on the 10-year U.S. Treasury note edged down slumped nearly .05 percent to 2.842 percent. Yields move inversely to prices.

Gold, another safe haven, climbed 0.8 percent to trade around $1,830 per troy ounce.

Loading…

The Washington Post: Breaking News, World, US, DC News and Analysis


Like it? Share with your friends!

0

What's Your Reaction?

Confused Confused
0
Confused
Cute Cute
0
Cute
Damn Damn
0
Damn
Fail Fail
0
Fail
Fun Fun
0
Fun
Geeky Geeky
0
Geeky
Hate Hate
0
Hate
Lol Lol
0
Lol
Love Love
0
Love
Love-2 Love-2
0
Love-2
Omg Omg
0
Omg
Scary Scary
0
Scary
Vomit Vomit
0
Vomit
Win Win
0
Win
Wtf Wtf
0
Wtf

0 Comments

Your email address will not be published.

AllEscort
Choose A Format
Story
Formatted Text with Embeds and Visuals
Video
Youtube, Vimeo or Vine Embeds
Audio
Soundcloud or Mixcloud Embeds
Image
Photo or GIF
Meme
Upload your own images to make custom memes
Gif
GIF format
Poll
Voting to make decisions or determine opinions
Personality quiz
Series of questions that intends to reveal something about the personality
Trivia quiz
Series of questions with right and wrong answers that intends to check knowledge
List
The Classic Internet Listicles
Open List
Submit your own item and vote up for the best submission
Ranked List
Upvote or downvote to decide the best list item
Countdown
The Classic Internet Countdowns