The Federal Reserve has signaled it will aggressively raise interest rates to try to control inflation, which is the highest in decades. Throw in the war in Ukraine and a slowdown in China's economy, and investors have been forced to reconsider what they're willing to pay for a wide range of stocks, from high-flying tech companies to traditional automakers. Big swings have become commonplace and Monday was no exception.
The S&P 500, Wall Street's main barometer of health, slid 3.9% Monday to 3,749. That's nearly 22% below the high set on Jan. 3. The Nasdaq is already in a bear market, down 32.7% from its peak of 16,057.44 on Nov. 19. The Dow Jones Industrial Average is more than 17% below its most-recent peak. Last month, the Fed signaled additional rate increases of double the usual amount are likely in upcoming months. Consumer prices are at the highest level in four decades, and rose 8.6% in May compared with a year ago.
If customers are paying more to borrow money, they can't buy as much stuff, so less revenue flows to a company's bottom line. Stocks tend to track profits over time. Higher rates also make investors less willing to pay elevated prices for stocks, which are riskier than bonds, when bonds are suddenly paying more in interest thanks to the Fed.
While dumping stocks would stop the bleeding, it would also prevent any potential gains. Many of the best days for Wall Street have occurred either during a bear market or just after the end of one. That includes two separate days in the middle of the 2007-2009 bear market where the S&P 500 surged roughly 11%, as well as leaps of better than 9% during and shortly after the roughly monthlong 2020 bear market.
Canada and the US are price increasing the economy into a recession. Eventually society can’t shoulder the increases. accountantsrunningcorporations
Fear mongering by media
Ban the stock market
It means justinflation
It means Doug Ford's economy will not come 'roaring back'! Doug's got a problem and glad he won the election otherwise the NDP would have been blamed for everything under the Sun. It's your problem Doug! Now it's up to you to prove you're a leader 🤡!
It means JustinTrudeau is a gashoIe.
It means tomorrow it will have a nice rally