4:15pm: Volatility may be the new normal
The Dow ended the day down 237 points, 0.8%, at 31,253 after briefly peaking above the flatline. The Nasdaq spent more of the session above water but closed 27 points, 0.3%, lower at 11,389. The S&P 500 shed 23 points, 0.6%, to 3,901.
The S&P 500 is down 18% from its record-high in January, which puts it close to being considered in a bear market. It was a rollercoaster of a day for the benchmarks, which may be here to stay, according to Greg Bassuk, CEO at AXS Investments,
“The main takeaway for investors is to brace for extended volatility,” Bassuk said, as reported by CNBC. “We believe that volatility is going to be the investor narrative for the balance of Q2, and frankly, you know, for the balance of 2022.”
Target Corporation (NYSE:TGT) stock lost another 5% Thursday a day after plummeting about 25% on a significant earnings miss.
12:05pm: Tech stocks up at noon
US were mixed at midday, with the tech-heavy Nasdaq inching into positive territory.
Just after noon the index had gained 114 points or 1% at 11,532 points.
The Dow and the S&P 500, however, remained in the red down 0.7% and 0.2% respectively.
IG chief market analyst Chris Beauchamp the sea of red was getting deeper by the day as the reversal that started so dramatically on Wednesday picked up the pace.
“The bounce of the first half of the week is a distant memory,” Beauchamp said.
“Growth worries are back to the fore and investors are back to selling every bounce as they fret about a recession in the US and elsewhere.”
“The end of earnings season might provide some brief respite from all the negativity, but with more high inflation readings and interest rate hikes to come stocks are going to suffer a lot more bad news.”
City Index and FOREX.com market analyst Fawad Razaqzada said investors’ list of worries continues to grow even larger, including inflation, interest rate hikes, low economic growth, stagflation, and recession.
“Perhaps most importantly for stocks, the Fed is not there to provide cushion, like before. In one of his most hawkish remarks, Fed chair Jerome Powell on Tuesday said that interest rates will rise until there is 'clear and convincing' evidence that inflation is in retreat. That could be a long wait,” he said.
Razaqzada noted that consumer confidence was likely to drop further as incomes were squeezed.
“Those big falls in shares of retailers – Target and Walmart – and others such as Amazon and Apple we saw on Wednesday certainly point towards this trend, as profit margins are squeezed at a time when consumers are likely to cut back on their spending," he said.
“Producers will be passing on raised input costs onto consumers, and this will ensure inflation is not going to be easing significantly any time soon, at a time when the economic outlook also appears grim.”
Target and Walmart stock prices continued to drop just after noon, down 5% and 2% respectively.
11.05am: Proactive North America headlines:
CO2 GRO announces the start of a technology trial with a Canada-based cucumber greenhouse
Aurion Resources (TSX-V:AU) to expand its Lapland, Finland property with acquisition of the Keulakkopää exploration permit
EverGen Infrastructure establishing itself quickly as a leader in the renewable natural gas energy space
Trust Stamp (NASDAQ:IDAI, EURONEXT:AIID) teams up with IdRamp to create dynamic biometric multifactor authentication solution
Think Research enters $4.1M content and learning management agreement with global pharmaceutical company
Alternus Energy reports fifth consecutive quarter of annual recurring revenue growth as it boosts portfolio of solar parks
Cardiol Therapeutics (TSX:CRDL, NASDAQ:CRDL) appoints Teri Loxam and CFO Chris Waddick to its board of directors
Nextech AR Solutions wins new 3D modeling deals for e-commerce
Edison Lithium poised to spin out its Ontario cobalt assets into separate subsidiary
Tocvan Ventures sells Rogers Creek project to focus on core Mexican assets
Alkaline Fuel Cell Power announces first key milestone in the development of hydrogen fuel cell
Plurilock says it is listed as ‘representative vendor’ in 2022 Gartner Innovation Insight for Biometric Authentication report
South Star Battery Metals to raise C$2M in non-brokered private placement
PowerTap Hydrogen gets unanimous approval for site design from City of Fortuna in California
Predictive Oncology closes two concurrent offerings raising gross proceeds of $7.2M
9:40am: US stocks slip at the open
US stocks opened lower on Thursday as the Wall Street sell-off continues amid growing recession concerns.
Just after the open, the Dow had shed 344 points or 1.1% at 31,146 points.
The S&P 500 was down 26 points or 0.7% at 3,897 points and the Nasdaq had slipped 33 points or 0.3% at 11,386 points.
Meanwhile, US jobless claims rose by 17,000 to 281,000 in the last week as continuing claims fell from 1.342 million to 1.317 million.
ZEDRA global head of fiduciary investment services Toby Sturgeon said this was in itself good news for the US economy but noted, with the US equity market facing its seventh consecutive negative week, it was unsurprising there was little focus on the annoucement.
"With so many other major factors being considered, the spectre of a recession is back in focus and investors have sought safe havens," Sturgeon said.
“If US markets do fall this week, it will be the longest run since 2001. The mere fact that this didn’t happen during the great financial crisis and with many indicators pointing towards being in oversold territory, perhaps investors should hold their nerve.”
6.30am: Stocks seen continuing downtrend
US stocks were expected to open lower on Thursday as stubbornly high inflation, coupled with tough talk from the US Fed sustained concerns that the global economy may be headed for a recession.
Wednesday’s intense sell-off in equities, their worst in two years, could bring out bargain hunters who have been sitting on the sidelines.
Futures for the Dow Jones Industrial Average were down 1.32% in pre-market trading, while those for the broader S&P 500 index fell 1.38% and the tech-heavy Nasdaq lost 1.46%.
“The sentiment in the market is highly negative as traders and investors are largely concerned about an economic downturn and soaring inflation,” said Naeem Aslam, chief market analyst at Avatrade.
He said the latest set of disappointing earnings from large US retailers signal that conditions “must be immensely dire” for smaller to medium businesses that do not have the luxury of passing off higher costs to consumers, raising fears of a recession.
“The earnings results from Walmart and Target have made one thing clear for them (that) inflation is such a problem that retail giants like Target are struggling to absorb the shock created by (it),” he added.
Aslam noted that talk in the market of some consumers continuing to maintain their lifestyles by borrowing is adding to market concerns because higher debt at a time of looming recession is “the perfect cocktail for a major disaster”.
Major retailers have blamed rising costs, sluggish sales and supply-chain disruptions for their weak earnings, and later today, investors will be looking for fresh evidence from others such as VF Corp, Kohl’s and BJ Wholesale Club to see if they have been able to successfully deflect some of the higher costs.
Also up for release later are data on US home sales for April, which are expected to show a third-straight monthly fall, and the latest jobless claim numbers, forecast at 200,000.
Energy markets are also showing a downtrend in tandem with stocks, with the WTI crude oil futures down 1.49% at $107.96 a barrel and the Brent crude futures down 0.93% at $108.09.
Contact the author at jon.hopkins@proactiveinvestors.com