Market indexes could not hold onto the gains they had attained ahead of the opening bell to start a new trading week. Oil prices continued to slide — even dipped below $100 per barrel for a short time — and wound up -6.5% and -6% on WTI and Brent crude, respectively. Breaking with trends we’ve seen of late, a fall in oil prices did not equate to gains in the stock market.
The Dow barely gained a point on the day, +0.003%, while the S&P 500 dropped -31 points to -0.74%. But the big loser was once again the tech-heavy Nasdaq, which fell for the third straight session and dumped -262 points, -2.04%. The index is now more than -8% year to date.
“Yield-curve inversion watch” took a step back today, with the 10-year barely pausing past the 2% mark, climbing now to 2.145%. The 2-year bond yield also increased, but by a much slower pace: +0.04% to 1.863%. An inversion of 2-year and 10-year yields is an indicator a recession may be on its way to the economy.
That, however, is based on more normal situations in the marketplace than we’re seeing currently: climbing out of a two-year pandemic, only to be mired in a brutal war of choice in Eastern Europe, where normal trade channels with Russia, the aggressor nation, are being shut down by much of the Western world. Chances of a recession — or a depression — in Russia are currently very high; chances of a residual recession hitting Europe are fairly good. But in the U.S.? Harder to see.
Basically, the markets are still beholden to what comes out of the Fed meeting this week. Starting Tuesday and ending Wednesday afternoon, current expectations are for a 25-basis-point hike to currently near-zero interest rates, with some sort of action taken on draining some of the $9 trillion currently on the Fed’s balance sheet. Once this is completed, we can get on with our business of seeing where the economy may be headed.
It’s been six weeks since the last Fed meeting, and a lot has happened in that time. Obviously, the Russian invasion of Ukraine, but also 40-year-high inflation metrics have been spooking market participants, and everyone realizes only the Fed taking an incremental move higher on interest rates will be able to stem the tide. So we’ve got another day between now and the decision.
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Indexes Slide, Along with Oil Prices
Market indexes could not hold onto the gains they had attained ahead of the opening bell to start a new trading week. Oil prices continued to slide — even dipped below $100 per barrel for a short time — and wound up -6.5% and -6% on WTI and Brent crude, respectively. Breaking with trends we’ve seen of late, a fall in oil prices did not equate to gains in the stock market.
The Dow barely gained a point on the day, +0.003%, while the S&P 500 dropped -31 points to -0.74%. But the big loser was once again the tech-heavy Nasdaq, which fell for the third straight session and dumped -262 points, -2.04%. The index is now more than -8% year to date.
“Yield-curve inversion watch” took a step back today, with the 10-year barely pausing past the 2% mark, climbing now to 2.145%. The 2-year bond yield also increased, but by a much slower pace: +0.04% to 1.863%. An inversion of 2-year and 10-year yields is an indicator a recession may be on its way to the economy.
That, however, is based on more normal situations in the marketplace than we’re seeing currently: climbing out of a two-year pandemic, only to be mired in a brutal war of choice in Eastern Europe, where normal trade channels with Russia, the aggressor nation, are being shut down by much of the Western world. Chances of a recession — or a depression — in Russia are currently very high; chances of a residual recession hitting Europe are fairly good. But in the U.S.? Harder to see.
Basically, the markets are still beholden to what comes out of the Fed meeting this week. Starting Tuesday and ending Wednesday afternoon, current expectations are for a 25-basis-point hike to currently near-zero interest rates, with some sort of action taken on draining some of the $9 trillion currently on the Fed’s balance sheet. Once this is completed, we can get on with our business of seeing where the economy may be headed.
It’s been six weeks since the last Fed meeting, and a lot has happened in that time. Obviously, the Russian invasion of Ukraine, but also 40-year-high inflation metrics have been spooking market participants, and everyone realizes only the Fed taking an incremental move higher on interest rates will be able to stem the tide. So we’ve got another day between now and the decision.
Questions or comments about this article and/or its author? Click here>>