4:13pm: Of the benchmarks, only the Dow eked out a positive day
The Dow closed Wednesday up 82 points, 0.3%, at 31,029, the Nasdaq Composite ticked down 4 points to 11,178 and the S&P 500 shed 3 points to 3,819.
Meanwhile, the Russell 2000 Small Cap Index dropped 20 points, 1.2%, to 1,719.
Traders have frequently been faced with increased volatility, and Wednesday was no exception.
“We expect significant volatility this summer, with ‘face-ripping’ short-covering rallies followed by economically-inspired market slumps,” Wells Fargo senior equity analyst Christopher Harvey said in a note Wednesday, according to CNBC. “While a much anticipated market ‘washout’ could catalyze a more sustained move higher, we think the market will not sustain a rally until it believes the Fed will toggle from a 50-75bp tightening to a more mundane 25bp increase.”
One riser was General Mills (NYSE:GIS) Inc, shares of which climbed more than 6% to $74.76 after the cereal maker posted quarterly revenue and earnings results that beat Street expectations.
12.05pm: Powell’s comments pile on pressure
US stocks remained mixed at noon as investors weighed up the latest batch of confidence-crushing financial data that showed the American economy shrank more than expected during 1Q.
At midday, the Dow Jones Industrial Average had added 81 points at 31,028 points.
Both the S&P 500 and the Nasdaq Composite had dipped into the red, at 3,819 points and 11,123 points respectively.
IG chief market analyst Chris Beauchamp commented that markets were struggling to make headway today in a choppy trading session.
“It has been one of those closely-fought days between buyers and sellers,” he said. “It does look like we are still in the first phase of this bear market, where indices are prepared to drop on the slightest bit of bad news, and any rally is short-lived. So far a sustained bounce seems unlikely.”
He noted that Fed chair Jerome Powell’s comments in his latest speech had piled more pressure on risk assets.
“Given the skittish nature of investors right now, Powell’s comment about controlling inflation requiring ‘some pain’ was bound to cause more investors to hit the sell button,” Beauchamp said.
10am: Proactive North America headlines:
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Goldshore Resources reveals further high-grade gold intercepts at its Moss Lake property in Ontario
American Resources says SPAC vehicle lands merger agreement with Royalty Management, plans Nasdaq listing
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World Copper launches non-brokered private placement for gross proceeds of up to $2.5 million
Jushi Holdings debuts first line of concentrates using hydrocarbon extraction of fresh frozen cannabis flower
Unigold aims for feasibility study, ESIA and approved exploitation concession licence for Candelones during Q3 this year
Kodiak Copper unveils significant results from initial 2022 drilling at MPD copper-gold project in southern British Columbia
Mednow subsidiary partners with non-profit company HepCURE to help eliminate hepatitis C in Canada by 2030
Copper Fox announces results of airborne geophysal survey of Sombrero Butte copper project
CULT Food Science Corp announces investment in company advancing cell-based coffee alternative
Clean Air Metals files Q1 2022 report showing total assets of $45.35 million
9.35am: Recession fears rising
US stocks opened mixed on Wednesday as the latest quarterly US GDP data has shown that the American economy is slowing down.
At the open, the Dow Jones Industrial Average was up 53 points at 31,000 and the S&P 500 was steady at 3,823 points, while the Nasdaq Composite had dipped 30 points at 11,152 points.
The final first-quarter US GDP figures have come in lower than expected, showing a 1.6% annualized quarter-on-quarter decline, compared to the 1.5% drop previously reported and expected by the markets.
BRI Wealth Management CEO Dan Boardman-Weston said the downward revision of 0.1% compared to estimates arose predominantly as a result of lower personal consumption expenditures but slightly higher inventory investment.
“The data is superseded by more recent data points which suggest that the American economy is continuing to slow amid the pressures of high inflation and higher interest rates,” he said.
“It seems increasingly likely that the US economy may enter a recession at some point over the next year but the question on everyone’s minds is how bad might it be? The picture will become increasingly clear as we head into the second half of 2022.”
6.30am: More woes, more volatility
US stocks were expected to open softer on Wednesday after taking a big hit on Tuesday in the wake of a slump in US consumer confidence which once again reminded investors that the world’s largest economy is likely to be heading for a recession.
Futures for the Dow Jones Industrial Average were trading 0.07% lower pre-market, while those for the broader S&P 500 index were down 0.1% and futures for the tech-laden Nasdaq-100 were off 0.3%.
“US and European stock futures are trading lower as traders are concerned about the gloomy economic outlook,” said Naeem Aslam, chief market analyst at avatrade.com, noting that the environment of higher interest rates is expected to threaten economic growth.
“Yesterday, we saw the wheels coming out of the bear market rally in the US and in Europe, and the sell-off became a lot more intense for the Dow Jones stock index, which shed nearly 500 points while the Nasdaq index plunged 2.98%,” he added.
US stocks sank yesterday after the Conference Board Consumer Confidence Index slipped to 98.7 in June from 103.2 in May and came in well below market expectations, signaling that consumers are tightening their belts.
Investors will also be keeping a watchful eye on US Federal Reserve chairman Jerome Powell’s latest speech today. During his two-day testimony before Congress last week, Powell warned that achieving a soft landing for the US economy would be challenging.
“As for Powell, after his testimony last week, the focus will be on what he avoided to mention in his speech, not what he said during his testimony,” said Aslam.
While the Fed still has a lot of room to maneuver, for today, traders will focus on the strength of the dollar which has once again proved itself that it is the ultimate safe haven among other fiat currencies, he added. A strong dollar will weigh on US exports, adding another threat to the US economy.
Powell's EU and UK counterparts Christine Lagarde and Andrew Bailey are also speaking today. Their remarks will be closely watched for clues about the prospects for the global economy.
In energy markets, WTI crude oil futures were up 0.4% at $112.16 a barrel while Brent crude futures were 0.3% higher at $114.19 ahead of OPEC’s meeting today. The focus will be on the cartel’s decision on oil supply.
Contact the author at jon.hopkins@proactiveinvestors.com