On Tuesday, the S&P 500 recorded its largest loss in nearly 2 months, down 2.81%, and the NASDAQ had it worse. This week marks one that contains some pretty big earnings reports, and they’ve sure disappointed so far. General Electric warned investors about supply chain disruptions for the rest of the year, which is important as they are one of the largest blue-chip stocks in the market. Companies like UPS also struggled, and it wasn’t a good showing for the morning batch which was a major contributor to the selloff. Investors hope that the next few days show better results as the current earnings are showing a slowdown in Corporate America.
Furthermore, Treasury yields are reaching 2018 levels, with the yield on the 10 Year note hovering around 2.73% as investors are selling bonds in anticipation of a rate hike. Assets that were once considered risky are now being hammered due to this along with decelerating growth in the macroeconomic landscape. Safe assets like gold are rising, and large economies like China are facing struggles with COVID lockdowns, hurting the global markets even more. However, it needs to be noted that Xi vowed to outpace the United States in GDP growth this year, which should instill confidence. We discussed how fund managers are moving towards cash, and with today’s performance and news it seems justified. All of these seem like long-term economic issues, and the country is in deep political gridlock that could come back to bite if a recession is to happen.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.