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Investors Are Concerned About Rising Interest Rates and the Possibility of a New Recession as the Stock Market Takes Another Hit.

Originally published on Best Stocks

Source: Getty Images


The Dow Jones+0.27% fell 330 points or 1.1% after the index gained 82 points to settle at 31,029. Nasdaq COMP –0.03 percent futures indicated that the S&P 500 –0.07% would fall 1.4% and the tech-heavy Nasdaq would fall 1.7%; both indexes closed down on Wednesday.

Overseas, the Stoxx 600 index in Europe fell 1.8% while the Nikkei 225 index in Japan lost 1.5%.

Market narrative in 2022 has been driven by concerns about the Federal Reserve’s strategy to reign in decades-high inflation with aggressive interest rate rises — and the danger of recession that comes with it.

Henry Allen, an analyst at Deutsche Bank, says that “if everything continues the same today, the S&P 500 is now likely to conclude [the first of the year] with the S&P 500 off to its worst H1 since 1970 in total return term. According to Allen, a significant factor is investors’ concern that rate rises to combat inflation may trigger another recession. Last night, Fed Chair Powell, European Central Bank President Lagarde, and Bank of England Governor Bailey all reiterated their plans to bring inflation back to goal at a panel discussion at the ECB’s Forum.

The S&P 500 had its greatest day since 2020 last week, but the rise has since waned, with stocks giving up most of their gains in the most recent sessions. On Thursday, that was expected to continue.

This month and quarter are coming to a close. Oanda broker analyst Jeffrey Halley predicts “some substantial rebalancing flows” from institutional investors across many asset classes. In today’s markets, it might lead to some false positives and skew price movements.

Today’s personal consumption expenditures price index in the United States might act as a spark. Since PCE is the Fed’s favorite inflation gauge, the data will be heavily scrutinized.

After a 5 percent drop, Bitcoin BTCUSD –5.60 percent dipped below $20,000 but remained over $19,000 in the cryptocurrency market. For the first time since 2011, the biggest cryptocurrency is on course to have its worst quarter. One of Ethereum’s smaller rivals Ethereum EUR –8.22% has fallen 9 percent to a little over $1,000, as it aims to end its worst quarter on record.

To counter the slowing demand brought on by rising mortgage rates, RH (ticker: RH) saw its shares drop 6% in premarket trade. RH is a home goods company.

As a result of a decrease in the value of digital assets, stocks exposed to this sector have done poorly. Fintech Block (SQ) and cryptocurrency exchange Coinbase Global (COIN) both saw their shares fall by 5%. MicroStrategy (MSTR), a software business with major Bitcoin holdings, fell 10%, while crypto miners Marathon Digital (MARA) and Riot Blockchain (RIOT) both fell 5%.

BNP Paribas cut SAP (SAP) from Buy to Neutral, citing demand and economic challenges as reasons for the drop of 5%.

Shares of Sanofi (SNY) fell 3% after the Food and Medication Administration halted patient enrollment in two multiple sclerosis drug trials.

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