Futures on stocks fell on Thursday night when investors tuned in to the fact that the S&P 500 is potentially slipping into the official bear market.
Futures pegged to the Dow Jones Industrial Average fell 68 points, or 0.2%. S&P 500 futures lost 0.2% and Nasdaq-100 futures fell 0.3%.
On Wednesday, the S&P 500 and Dow rebounded from their intraday lows, but still fell 0.1% and 0.3%, respectively. S&P has closed more than 18% of its all-time high and will be in the official bear market if that loss deepens to 20%. The Dow was declining for six consecutive trading sessions.
The Nasdaq index rose less than 0.1% on Wednesday, but the technology level index is already in the bear market, falling more than 29% from its all-time high.
The stock market has collapsed in months, starting with unprofitable high-tech stocks late last year and extending even to companies with healthy cash flows in recent weeks. On Thursday, Apple hit the bear market, becoming the last of the Big Tech names to go on sale.
The decline wiped out much of the rapid rise in stocks that benefited from pandemic lows in March 2020.
“Large deviations from long-term price trends have been used to identify the bubble. We believe that US stocks were in the bubble based on this indicator and are now coming out of it,” Citi strategist Dirk Wheeler said in a note to customers on Thursday. .
One of the reasons that stocks have been experiencing difficulties in recent months is high inflation and attempts by the Federal Reserve to restrain prices by raising rates. Fed Chairman Jerome Powell told the NPR on Thursday that he could not guarantee a “soft landing” that would lower inflation without causing a recession.
Although the stock won a two-week rally after the Fed’s first rate hike in March, those gains were quickly erased by a tough April, and sales continued in May. There are some signs, such as investor sentiment surveys and some stabilization in the Treasury market this week, that the market may be close, but many investors and strategists say the market may need to take another significant step down.
“You get this market that really wants the bottom, rally aid. But at the end of the day there was no surrender, ”said Andrew Smith, chief investment strategist at Delos Capital. Advisors.
The development of cryptocurrencies this week also upset Wall Street: bitcoin fell well below $ 30,000, and stablecoins are struggling to keep their peg.
As for economic data, on Friday we read the April import prices and an early look at consumer confidence in May.