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CHART OF THE WEEK: PANIC SELLING
Market sentiment is more bearish now than at March bottom…
WEEKLY SUMMARY
Rising interest rate fears and growth worries pushed the S&P 500 Index to its biggest decline since October 2020. US small caps and the Nasdaq declined the most. The Russell 2000 index had its worst week since June 2020. The Nasdaq index slumped roughly 7.5%, its biggest weekly drop since the start of the pandemic. Weakness in semiconductor shares weighed on technology stocks, while weakness in automakers and home improvement retailers dragged down the consumer discretionary sector. A more than 20% decline in Netflix shares following its fourth-quarter earnings report contributed to the indexes’ losses on Friday. Financial stocks JPMorgan Chase and Goldman Sachs were hard hit as well. Shares in Europe ended lower, as expectations grew that the ECB would raise interest rates this year. In Fixed Income, the US jobs data appeared to result in the flattening of the Treasury yield curve. The US 10-year yield hit 1.90% on Wednesday—its highest level since late 2019—but fell back sharply in the wake of Thursday morning’s weaker-than-expected jobless claims report. The dollar ended the week higher - its best week in the last 5. Cryptocurrencies collapsed as Bitcoin hit $35k and Ethereum $2,500.
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Worries over an economic slowdown appeared to weigh on sentiment as the S&P 500 recorded its worst weekly performance since March 2023 . Tech shares led the declines, driven in part by a drop in NVIDIA following rumors that it may be the subject of a Justice Department antitrust investigation, which led to a roughly USD 300 billion drop in the chip giant’s market capitalization. Energy shares were also especially weak on the back of a decline in oil prices. Conversely, the typically defensive utilities, consumer staples, and real estate sectors held up better. US economic data generally surprised on the downside, raising fears that the Federal Reserve had waited too long to ease monetary policy.