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 story : Market Extra: ‘Growth scare’ permeates U.S. stocks as estimated trillion to trillion of household wealth evaporates in five months #FinanceUSA #StockMarketNEWS Four Paws/Agence France-Presse

@stockMarketNEWS Sat 21 May, 2022

Posted in: #FinanceUSA #StockMarketNEWS

Market Extra: ‘Growth scare’ permeates U.S. stocks as estimated trillion to trillion of household wealth evaporates in five months #FinanceUSA #StockMarketNEWS
Four Paws/Agence France-Presse via Getty ImagesAmid a sea of red in U. S. stock markets on Friday, a fundamental shift in investors’ thinking is taking place, one which analysts describe as a “growth scare. ?A “growth scare? is characterized by a correction in anticipation of slowing economic growth, even if such a slowdown hasn’t yet been borne out by the data. Dow industrials DJIA are poised for their longest streak of weekly losses in 90 years and the S&P 500 SPX appeared to be on track to close in bear-market territory, as investors flocked to Treasurys and the dollar as safe havens of choice. Friday’s broad-based selloff in equities punished every industry and every stock strategy —- from value and small-cap to growth, as well as the consumer-discretionary, energy, utilities, financial and tech sectors. Economists at JPMorgan Chase & Co. JPM estimate that U. S. household wealth has fallen by trillion to trillion in 2022, driven largely by falling equity prices. And BofA Securities strategists ranked U. S. equities as this year’s worst-performing asset class, as well as the third-biggest loser among global stocks ahead of only Chinese and German equities, based on data through Wednesday. Prior rounds of U. S. stock selloffs this year were largely driven by prospects of rising interest rates from the Federal Reserve, which is attempting to stomp out the highest inflation in four decades. While the risks of a recession or economic slowdown lingered in the backdrop, they hadn’t been brought to the fore. Many in financial markets have remained confident the U. S. can avoid a downturn, or speak of recession risks in terms of the next one to two years. Data released in April shows the U. S. economy shrank 1. 4% during the first quarter, mainly because of a record U. S. trade deficit, following a 6. 9% surge in GDP in the final three months of 2021. The National Bureau of Economic Research defines a recession as a significant decline in activity lasting more than a few months. But deteriorating stock values and financial conditions may have the potential to hasten the anticipated arrival of an economic downturn, according to some traders. “For a good portion of this year, we saw a positive correlation between equities and bonds: that is, a selloff in equities and selloff on bonds,? said Subadra Rajappa, head of U. S. rates strategy at Société Générale. “Now, we’re seeing a rally in bonds correspond to a selloff in equities. The subtle shift is that bonds are starting to act as safe haven, suggesting a growth scare and the potential for demand destruction that leads to lower growth.


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