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WEEKLY SUMMARY: S&P 500 index down 6 weeks in a row
It was another volatile week in Wall Street as the S&P 500 recorded losses for the sixth week in a row - the longest negative stretch since 2008. Investors appeared to grow increasingly skeptical that the Fed will be able to achieve a “soft landing” for the economy. At its low point on Thursday, the S&P 500 was down nearly 18% from its peak, well into correction territory but just above the -20% performance threshold that typically defines a bear market. US equities pared losses on Friday, helped by a rally in Tesla after Elon Musk tweeted that his deal to buy Twitter—partly funded by sales of a portion of his stake in Tesla —was “on hold.” On Wednesday, US inflation data weighed on sentiment as headline numbers fell back a bit from March’s pace but not as much as expected, rising 8.3% y/y versus consensus estimates of around 8.1%. The smaller-than-expected decline in consumer inflation caused a brief jump in the 10-year U.S. Treasury yield on Wednesday, but it ended sharply lower for the week as a whole and fell back below 3.0%. Shares in Europe rebounded from earlier weakness to finish higher, despite ongoing concerns about inflation and ECB’s Lagarde hinting at potential rate increase in July. Chinese stocks rallied as a fall in covid cases and reassuring comments from the securities regulator lifted investor sentiment. Cryptocurrencies crashed on the back of the Terra-USD stablecoin implosion, further suggesting a strong risk-off environment.
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Stocks suffered their worst week in six months as an avalanche of geopolitical and macro-economic headlines crossed paths with an ugly technical situation. The S&P 500, Nasdaq and Russell 2000 indices all fell by over 3%, while the Dow Jones shed 2.37%, erasing most of its year-to-date gains. Ongoing uncertainty around trade policy remained a focal point throughout the week. Macro data shows manufacturing growth slowing while services activity is accelerating. The U.S. economy added 151,000 jobs in February, slightly below expectations but ahead of January’s reading of 125,000. In Europe, the STOXX Europe 600 Index ended 0.69% lower, snapping 10 weeks of gains.
