Stocks tumbled Friday as the S&P 500 posted three straight quarters of losses for the first time since the aftermath of the global financial crisis more than a decade ago and is headed for a loss in the third quarter of this year. .
The S&P 500 has teetered between gains and losses after the government announced another higher-than-expected inflation measure. The Federal Reserve is raising interest rates rapidly in an attempt to slow the pace of inflation, but sustained inflation risks requiring interest rates to rise even further, ultimately risking undue damage to the economy. Raise it.
The S&P 500 is on track for its third straight week of declines and third straight quarter of declines, the kind of loss investors haven’t faced since 2009. -The loss so far is about 24%.
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This year’s stock and bond market declines have been painful and future developments remain difficult to predict.
- Disagreement: Some investors don’t understand how the Federal Reserve can bring down inflation without jeopardizing high unemployment.The Fed looks more optimistic.
- Survive the Storm: The stock and bond market crashes have been especially rough for people paying for college, retirement, or a new home.
- college savings: The 529 plan is collapsing as the stock and bond markets rock. what does the family do? There is no one-size-fits-all answer, but there are options.
- Persistent memetic strain: The frenzy that traders have flocked to on social media and boosted the stock prices of companies like GameStop can no longer be simply explained as a pandemic phenomenon.
By raising borrowing costs for consumers and businesses, central banks around the world are trying to dampen demand and slow the pace of inflation. While this is important for the long-term health of the economy, rising costs are usually bad for stocks in the short term as they squeeze earnings.
“The conditions are not yet there for a sustained shift in market sentiment,” said Mark Häfele, chief investment officer at UBS Global Wealth Management. needs compelling evidence that the threat of inflation is receding.”
Equity sell-offs capped a week of intense trading, boosting inflation fears from a proposed tax cut, raising concerns over UK borrowing needs, sharply declining British pound and soaring government bond yields for investors. A new crisis emanates from Britain.
Whipsaw’s move highlights the challenges central banks around the world face in trying to keep inflation in check and loosen pandemic-era market support measures. policy proposed by the government.
Yields on government bonds jumped this week, but have risen significantly over the course of the year. In the U.S., the Fed’s policy-sensitive 2-year Treasury yield rose about 3.5 percentage points this year to 4.17%, and he jumped a whopping 1.22% in the third quarter alone. It is on track to achieve the largest annual growth rate on record.
Higher interest rates and higher yields, as well as the relative economic health of the United States when compared to the rest of the world, have attracted investment to Wall Street and other currencies representing major US trading partners. By that measure, the dollar has just experienced its biggest quarterly rally since the first quarter of 2015 and is at its strongest in 20 years.
Elsewhere, Europe’s Stox 600 posted its biggest quarterly loss since the first quarter of 2020 and was set to end the quarter about 12% lower due to market turmoil caused by the pandemic.
In Japan, the Topix index fell 7.9% in the three months to end September, while the mainland China stock index (CSI 300) fell more than 20%, posting its worst quarterly loss since the third quarter of 2015. rice field.