Wall Street falls as investors’ anxiety increases amid fears of a gloomy 2023 market outlook.
According to Goldman Sachs’ major market forecasts, 2022 losses and interest rate hikes will result in a short-term recession by the beginning of 2023.
2022 is about to come to an end, and now experts are turning their attention to 2023 and its future outlook. For the first time since 1999, expert estimations are not encouraging at all. The vast majority of market experts have a gloomy outlook for the S&P 500 stock market in the year 2023.
Inflationary pressure was a key factor in the FED’s aggressive interest rate hikes. But, the effects of higher interest rates have been negative for the S&P 500 index until now. As Goldman Sachs Group and other gloomy crowds have forecast before, increasing interest rates on regular and higher rates will lower the tech and SPX indexes to a critical and alarming point.
Gloomy outlooks and recession fears were clear for everyone during Wednesday’s trading hours. Wall Street’s main index had extended its losses for the second week.
According to the data, the S&P 500 index edged lower by 0.24 percent; if we count today’s decrease, that will be the fifth straight falling session for the S&P benchmark. As for the Nasdaq feature, Apple’s unpleasant production cuts caused a 60% decrease in the Nasdaq feature. The supply chain shortage remains a major concern for most major corporations, such as Apple Inc., whose stock fell 1.4% after announcing it would reduce iPhone production due to delayed shipments from Foxconn’s Chinese plant. As for the Dow Jones average industry, the index declined by 0.9 percent.
Meanwhile, the data shown today are positively correlated with the bond market, which might help ease monetary policy.
The concern about the escalating situation in China was a major factor in Wall Street’s losses last week. Up until now, the market volatility level has peaked at its highest level, and any unwanted conflict will only multiply the market recession probabilities.
Market expectations are looking weak for the moment in the wait for other important data that will be shown later this week. Inventors will turn all their attention to the weekly reports and surveys, including the weekly job report, producer index report, and other related economic data.
On top of that, what supports the probabilities of these gloomy expectations is the increase in the CBOE volatility index. In the past week, market analysis shows a sharp increase in the Wall Street volatility index to 23.01. Investors’ anxiety is increasing while Wall Street’s main index gains are declining.
Most experts fear that recent job growth reports and positive data might encourage Federal Reserve officials and policymakers to keep up with the current interest rate hike.
While nothing is official now, market analysis sees a 95% chance that the FED will lower its December interest hikes from 75% to 50%.
However, the stock market isn’t stable, and its main benchmark has taken losses for the past eight months.