Recession Fears Grow Urgently as the NASDAQ now closes April with Worst Performance since 2008
Next week will play a major role in the outlook on the possibility of a recession...
We saw a massive plunge in the U.S. stock market yesterday with the NASDAQ making its worst month since 2008 and the S&P 500 seeing its worst month since the pre-pandemic month of March 2020.
Amazon fell nearly 15% after it missed earnings which led to the charge as tech stocks witnessed a massive selloff leading to the shedding of 4.2% from the NASDAQ. The S&P 500 and the Dow followed suit dropping 3.6% and 2.8% respectively.
The CPI released yesterday, which is the most closely watched inflation reading, rose 5.2% from a year ago which spelled more trouble for the economy. The growing concern of a recession continues to blossom as the NASDAQ has now fallen around 12%, the S&P 500 fell 7%, and the Dow dropped 4% all in the month of April.
The United States GDP dropped by 1.4% and the Fed has shifted to a hawkish stance indicating the increased pace at which interest rates will be rising. Commodity price inflation has been on the rise due to the Russia - Ukraine war and many companies are left doubting their Q2 outlook. China has been exposed to a worsening growth and continues to disrupt global supply chains.
Back to the United States stock markets, the NASDAQ is now in the bear market territory, about 23% below its high. The S&P 500 is more than 13% lower than its high and the Dow is 10% lower than its record. Bank of America analysts trimmed 100 points off their year-end S&P 500 target on Friday, to 4,500. The average peak-to-trough decline in the S&P 500 amid recessions is about 32%, they said, meaning that the current 10% year-to-date decline "can be very roughly interpreted as discounting a one-third chance of a recession."
If the probability of a recession rises, the bank said, steep falls could continue. Next week investors will be closely watching the Fed's policy meeting, the April jobs report… Just be prepared and buckle in for a wild roller coaster ride!