The New York Stock Exchange fell off the cliff again on Monday, dragged down by technology stocks and energy, reflecting concerns about inflation, the Fed’s response to rising prices, and a possible recession.
The Dow Jones Industrial Average lost 1.99% to 32,245.70 points. The tech-heavy NASDAQ Composite fell 4.29% below 12,000 points for the first time since November 2020, to 11,623.25 units. For its part, the S&P 500 fell to less than 4,000 points, with a drop of 3.20% that left it at 3,991.24 integers, its lowest level since March 2021.
“Investors don’t get to buy low. There is no confidence,” said Gregori Volokhine of Meeschaert Financial Services. “The problem with the market is that it doesn’t know what would be the good news that would allow it to rally and if we don’t buy when it goes down, it could continue to go down.”
Analysts on Wall Street explained that individual investors are concerned about their investments, even some experts question the need to migrate to cash in the market.
The Dow Jones is down 11.26% so far this year, while the NASDAQ is down 25.7% and the S&P 500 is down 16%.
This is similar to what the market experienced in the spring of 2001 and the summer of 2008. The market should be near its lows, but no one knows what will happen in the short term.
The New York indices thus began the week sunk in negative territory after six consecutive weeks of losses for the Dow Jones and five for the NASDAQ and the S&P 500.
“Persistent inflation led the Fed to become more aggressive in its rate hike campaign, but that fueled uncertainties about its ability to stage a soft landing,” Schwab analysts warn.
“Rising interest rates and dollar strength continue to dampen sentiment and signal a tightening of financial conditions, while the war in Ukraine and lockdowns in China darken the outlook,” they added.
Waiting for inflation data
The market is also anxiously awaiting the US inflation figure for April to be released on Wednesday. This is the CPI index and the market expects inflation to remain above 8% in 12 months, a maximum in 40 years.
The technology sector led the losses. Rising interest rates erode the future earnings prospects of these companies.
Apple fell 3.32%, Tesla 9.07%, AMD and Nvidia lost more than 9%. Tesla registered a loss of 9% in the day and the Argentine with operations in all of Latin America, Mercado Libre, fell almost 17 percent.
Rivian, the manufacturer of electric pickups that entered the stock market in November, lost 20.88 percent. Ford, one of its largest shareholders, would have given up a large stake in the company, according to press reports.
Uber, which announced spending cuts, fell 11.9% to $23.25. Shares in information and data analytics group Palantir fell more than 20% to below $7, less than their IPO price two years ago. The firm posted a stronger-than-anticipated loss in the first quarter.
Reflecting fears over crude demand and economic activity due to restrictions in China, energy company stocks and oil prices fell in unison. (With information from agencies)