Wall Street chains another bad week and the S&P looks into a bearish cycle

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This content was published on May 20, 2022 – 20:43

Nora Quintanilla

New York, May 20 (EFE).- Wall Street is chaining another bad week due to fear of inflation and signs of recession in the United States, which has led one of its main indicators, the S&P 500, to enter briefly this Friday in a bear market cycle for the first time in more than two years.

In the weekly accumulated index, the Industrial Dow Jones fell 2.90%, recording its eighth consecutive week in decline; the S&P 500 is down 3.05% and the Nasdaq Composite Index is down 3.82%.

In Europe, the data has been mixed thanks to the positive effect of the drop in some interest rates related to mortgages in China: the stock markets of Madrid (1.76%) and Milan (0.19%) rise and those of Paris (-1.22%), London (-0.38%) and Frankfurt (-0.33%).

The New York parquet began the week in good spirits and ended in green on Tuesday, after the president of the US Federal Reserve, Jerome Powell, was determined to reduce inflation, which is around maximums not seen in four decades, and support interest rate hikes.

The calm was short-lived, as Wednesday saw the worst trading day since 2020, following weak quarterly results from two major retailers, Target and Walmart, which reported supply chain problems, higher fuel costs and merchandise sales. lower than expected.

Analyst Randy Frederick, from Charles Schwab, indicated today in a note that these results “have sparked concerns about the weakness of the consumer segment, but these concerns have not been reflected in the labor market”, although he considered that it could start to “deteriorate” soon.

The sell-off in stocks was initially located in technology and high-growth companies, but eventually permeated other sectors, taking the S&P 500 index to a level 20% below its last record today, although it regained ground in the end of the session and managed to overcome the pothole.

In the breakdown by sectors of the indicator, the week has hit essential goods companies especially hard, which lost almost 8%, followed by non-essential goods (more than 2%), and industrial companies (1.5%). ), while those of energy benefited, revalued more than 4%.

The energy sector, the only one to remain in the green since the beginning of the year due to the imbalance in the market, has continued to rise in tandem with fuel prices, with Texas oil futures trading at the bottom of this week about 114 dollars.

In the public debt market, the fear of a recession has led many investors to seek refuge in Treasury bonds, which has slowed the rise in their yields, and in the case of the 10-year title it is now below of 2.79% after touching 2.99% in the middle of the week.

In this regard, the analyst Ed Yardeni, from Yardeni Research, highlighted that the end of the accommodative policies of the Federal Reserve has scared Wall Street at a very “early moment in the adjustment cycle”, which broke “many speculative bubbles ” without a “credit crisis” scenario materializing yet.

As for cryptocurrencies, the most popular of them, bitcoin, has dropped from the $29,000 level this Friday after a turbulent week in which two cryptoactives considered stable, terra and luna, have collapsed, although experts also attribute decline to the stock market. EFE

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