- US stocks are modestly lower across the board on Wednesday as investors take profits after the recent impressive rally.
- Fading optimism from Russia and Ukraine, strong US data solidifying Fed tightening expectations, and yield curve inversions were cited as concerns.
- The S&P 500 is currently trading just above 4,600 and is on track to end the month up 5.3%.
US stocks fell modestly across the board on Wednesday as investors took profits after the recent impressive bull run, with an eye on geopolitical developments and the outlook for Fed policy and the US economy. The S&P 500which rose almost as high as 4,640 on Tuesday, traded back near the 4,600 level, having fallen around 0.5% as optimism over Russia-Ukraine peace talks faded somewhat after continued attacks. Russians in Ukraine.
Meanwhile, US data (March ADP Jobs and Ending 4Q GDP and Core PCE Inflation) were strong and viewed by investors as supportive of expectations of a 50bp rate hike by the US. from the Federal Reserve in May. Expectations of a faster Fed tightening have pushed key parts of the US yield curve into inversion recently, a concern for investors as yield curve inversions have forecast recessions with accuracy in the past. Both have also been cited by investors as reasons for Wednesday’s profit-taking and modest recession.
That means the index is on track for its first negative session in five and only the third since March 15. In fact, since that date, the index is up an astonishing 9.5% or so, and as the end of the month approaches, it is on track to post a monthly gain of around 5.3%. Thus, the S&P 500 is on track to post a quarterly loss of around 3.3%, the worst quarterly performance since the first half of 2020. But that masks the fact that the index was able to recover more than 11.5% from lows. previous quarterly figures registered in February to the area of ​​4,120.
Looking at the other major US indices; The tech-heavy Nasdaq 100 Index last fell around 0.7%, although it remains solidly supported above 15,100 after the index hit its highest level since mid-January on Tuesday at 15,250. On the week the index is still trading around 2.5% higher, as the end of the month approaches, gains since the end of February are around 6.3%. That strong monthly gain means the Nasdaq 100 is on track to end the quarter with losses of about 7.0%, which isn’t bad considering the index was down at one point more than 20% in the quarter. .
Lastly, the Dow Jones last fell 0.2% and remains solidly supported above the 35,000 level, putting it on track to end the month with gains of around 3.9% and quarterly losses of around 5.0%. The CBOE S&P 500 Volatility Index (or VIX) last consolidated in the 19.00 area and near its lowest level since mid-January, after falling precipitously in recent weeks from highs of 37.50 recorded earlier. of this month. Analysts have questioned the resilience of the broad stock market and the apparent complacency of the VIX (back below its long-term average of 20) in the face of such heightened risks related to geopolitics, Fed policy (and the central bank) and inflation.
Source: Fx Street
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