Stocks may experience more turmoil next week

news7g12/05/2021

8 4 minutes read

Stocks may experience more turmoil next week

Volatility could continue to affect the market after a week of intense volatility that saw many stocks plunge.

Over the next week, investors await more news on the Covid omicron variant and another inflation report on Friday, expected to show consumer prices remaining at three-decade highs.

Over the past week, stocks have sold off on worries about the omicron variation and concerns the Federal Reserve will walk away from easy policies and raise interest rates sooner than anticipated. Fed Chairman Jerome Powell addresses a congressional panel on Tuesday that the central bank will consider accelerating the collection of its $120 billion monthly bond-buying program when it meets on December 14 and 15.

“It will be a somewhat turbulent December as we may need to wait until earnings season to get back to fundamentals,” said Jack Ablin, chief investment officer at Cresset. Investment Manager at Cresset. “For a lot of ratios that would suggest, price-to-sales, price-to-earnings, when you throw it in the funnel with interest rates and everything else, things aren’t that bad. I don’t think we’re tilted. leaning on the edge of a cliff.”

But Ablin has said that comments from Powell have worried investors, who fear the Fed will also accelerate rate hikes. Powell admitted that he was wrong to suggest that inflation was “temporary” or temporary, misleading investors. The bond purchases are now scheduled to end in June.

“I’m not sure what investors read about inflation. Do they think the Fed will raise rates, go ahead too soon and everything will turn upside down? , investors have been somewhat out of balance,” said Ablin. speak.

Expect the consumer price index or CPI for November on Friday morning. Economists polled by Dow Jones predict it is up 0.6 percent month on month, or 6.7 percent year over year. That compared to a Up 0.9% in Octoberand up 6.2% year-on-year, the biggest increase in three decades.

Adventurous names are slamming

High values and growth were among the hardest hit Fridays, as investors bailed out some of the riskiest stocks. As stocks tumbled on Friday, Treasury yields fell. Yields change in contrast to price and this move is seen as a flight to safety. NS 10 years bond yields fell to 1.35%.

NS Improvements to ARK The ETF is down nearly 12.7% for the week. Most of the growth names in the fund plunge into bear market territory. “I think investors have to keep in mind that it’s not a 15-week strategy,” says Ablin. That’s a 15-year strategy.

During the week, small limit Russell 2000 fell nearly 4%, while the S&P 500 was down just 1.2%. The main sector that performed the worst for the week was media services, which includes internet companies. It fell 2.8%, followed by consumer discretion, down 2.4%. Finances lost nearly 2% and the S&P technology sector dropped 0.4% for the week. But on Friday, technology lost 1.7%.

The Federal Reserve will be silent for the next week. Fed officials traditionally don’t give keynote speeches in the meantime, i.e. next week, before their December 14 and 15 meetings. One exception is Minneapolis Fed President Neel Kashkari, who spoke Thursday at the India National Development Research Summit.

Much of the focus will be on the performance of the market itself.

“As of the November 22 external sale, all power has been sold with a lot of damage underneath the cover,” said Scott Redler of T3Live.com. said. “Now finally some of the leaders are showing the wrong actions.” He noted that both Microsoft and Apple weaker.

“Money doesn’t hide in Amazon, Google, or Facebook. They haven’t been special for weeks,” he said.

The S&P closed below its 50-day moving average on Friday, after closing below it on Wednesday. 50 days at 4,544. It is a signal to some market technicians that the index is on the verge of breaking. The 50-day moving average is the average closing price of the last 50 days and is used as a momentum indicator.

“Basically, it was really a retest of support because we had the relief rally. [Thursday]”, said Katie Stockton, founder of Fairlead Strategies. She said the S&P 500 needs to close below the 50-day mark for two days in a row before the move is considered broken.

“High growth, big name action is not a good sign,” Stockton said. “We have some signs of declining exhaustion but not as widespread as I expected. We’re seeing some strong contenders, like Adobe such as giving levels like a 50-day moving average. “She said some big names are now involved in the sale.

“We’re just watching to see how bad it gets. Monday will be the tell,” Stockton said. “That also gives it time for the weekend to settle… The extremes have turned a little more extreme. Sentiment is the most oversold on the contrarian view since the month’s lows. ten.”