The U.S. stock market once again declined after posting the largest one-day decline in two years. Market participants continued to sell their assets on fears that further rate hikes by the Federal Reserve to combat record inflation will still lead the U.S. economy into recession.
Dow Jones -0.75%
The Dow Jones Index lost 0.75% on a 13% decline in Cisco Systems (CSCO) stock, whose quarterly earnings performance fell short of analysts’ expectations. What’s more, the technology leader said earnings would disappoint in the current reporting period as well. The bearish sentiment in the shares of major U.S. retailers continued.
A trader on the New York Stock Exchange. Photo: Yandex
On the back of quarterly financial results Walmart (WMT) -2.74% shares fell more than 50% in the last three trading sessions, falling from $148 to $119 per share. Target (TGT) shares lost heavily for the second day in a row -5.06%. Apple (AAPL) -2.46% failed to hold the $140 level, hinting that things may still be ahead. Though note that a number of tech stocks, such as Nvidia and Amazon, have paused in the vertical.
The outlook for the U.S. stock market is murky
The S&P 500 is down 0.58%, trading solidly below the 4,000-point level and balancing at 19% of its highs, a break of which many are willing to interpret as entering a bear market condition
Some of the big names in the index made new 52-week lows on Thursday. Walmart shares are trading at their lowest level since July 2020, Bank of America and Charles Schwab securities have fallen to February 2021 levels. And Intel collapsed to October 2017 lows.
At the same time, European banking leader Deutsche Bank lowered its levels on the S&P 500 to 3,000 points yesterday, adding that a potential recession would bring much bigger losses than many expect, and the U.S. broad market equity index could lose 35-40%.
The U.S. Federal Reserve is not preening in its policies
Recall that yesterday at the Wall Street Journal conference, Federal Reserve Chairman Jerome Powell once again blatantly signaled two impending 50 basis point rate hikes at the coming meetings. Tension over the pace and scope of the Fed’s rate hike cycle has added to the pressure on stock markets that has persisted of late.
Oil remains expensive
Oil prices continue to show market resilience. Prices for major benchmarks added little in trading Thursday. West Texas Intermediate (WTI) futures are trading near $110 a barrel. North Sea Brent is near $112 amid Russian-Chinese talks to replenish strategic reserves of the Celestial Empire.
Will China restock?
While Europe, under pressure from Washington, is trying to cut energy ties with Moscow, Beijing continues to actively increase cooperation with Russia, Bloomberg said. According to the U.S. news agency, there are active contacts at the government level at the moment.
Taking into account Russia’s policy of discount prices in the current situation, the probability of a favorable outcome of the deal is very high, analysts suggest Kpler. Officially, China does not disclose the volume of strategic oil reserves, but according to industry sources, the oil storage capacity of the Celestial Empire reaches more than 1 billion barrels.