The S&P declined to its worst year-over-year level for the first time since 1938 and Europe posted a higher than expected inflation rate.
According to BoFa the S&P 500 and the treasury indexes record the worst performing years for the first time since 1938. Higher inflation rates and higher-than-expected interest hikes were key factors in these two indexes and others as well.
As of Monday this week, Wall Street’s three main indexes all fell into the bear market territory. The Nasdaq is down by more than 30% in the past 12 months. The S&P posted a 24% year-over-year decline, and the Dow average industrial was the last to come down, decreasing 20% this year.
This week’s stock market rally was mixed: the Dow index officially entered a bear market on Monday and Tuesday, but the Dow futures and Nasdaq stocks quickly recovered on Thursday. The third quarter of this year ended with more mixed predictions and forecasts about a bleak economic outlook.
Tesla Motors, on the other hand, is expected to deliver an outstanding quarter based on its CO-Founder Elon Musk’s notes. The company is expected to increase its unit deliveries in the upcoming quarter, suggesting that Tesla is living in one of its best-performing years.
However, we can’t say the same about Meta, Netflix, and Nvidia. In particular, Nvidia’s stocks declined by 3.2% on Thursday, adding more losses to the company.
The higher-than-expected inflation is continuing to weigh on the stock market. Friday’s gains were erased as of the midday trading hours in the NY stock market.
The S&P 500 is down 0.32% to 3,628.13 points as of 14:17 New York time, while the Nasdaq futures are down 0.08% to 10,728.15 points. Gold was up, and the dollar continued its currency exchange market domination.
As for the Dow future, the index erased Thursday’s gains by declining by 0.85% to 29,04.00 points.
The Fed Vice Chair, Lael Brainard, noted previously that it’s more likely for the Federal Reserve to maintain a higher interest rate in the next meeting. The FED is still committed to its radical monetary policy in order to reduce that 40-year all-time inflation. The FERD targets 2% inflation by the end of its policies, yet the question that remains unanswered is whether the market can stand this higher interest hike, especially when the whole economy is at stake.
In September, the Eurozone expected that inflation would hit 9.7 at least, yet recent reports showed a peak of 10% in most countries, including the UK, Germany, and France.
Today, EU leaders will hold a crucial meeting to discuss gas consumption in the Eurozone and how much it will be reduced. Gas prices in Europe are higher for the average consumer, and analysis believes that the prices are more likely to peak in the next three months. In early September, the Kremlin speakers blamed western countries and the U.S. for the gas supply crisis that we currently face. The Kremlin speakers added that US sanctions against their country had prevented them from carrying out necessary gas pipe maintenance and that the country could not import any gas unless this maintenance was carried out.