The Nasdaq Composite index for the first time since 2016, closed in the negative for the seventh trading day in a row. What’s the price of AMZN stock in the background of what’s going to happen next?
Almost two weeks have passed since August 26 and the negative impulse given to technological stocks by a “hawkish” speech by the Fed head, Jerome Powell still won’t die down. The Nasdaq Composite lost another 0.74% yesterday, marking the rarest series of seven consecutive days of declines. This was also reflected in the AMZN stock price today.
The last time something like this happened was in 2016, and generally speaking, you can count such cases on your fingers over the past decade. They don’t always occur during periods that are later remembered as major crises, and yet the seven-day or longer series usually do not pass them by.
They happened, for instance, in 2000 and 2001 during the dot-com bubble, and there was one in 2008 during the global financial crisis.
The year 2022 has a chance of being the first year that the “super bubble” deflates, to use the definition of Jeremy Grantham, a legendary investor. He is considered an expert in this particular field. After all, he is credited with predicting a lot of such implosions: Japan in the 1980s; the dotcoms, the mortgage crisis of the 2000s, and of course the current plunge.
What’s happening in the stock market right now?
Lately, Grantham has been talking about the dangerous and rare combination of several huge bubbles in the U.S. – in stocks, bonds, and real estate. Now all three are deflating. U.S. home prices fell in July for the first time since 2012, and stocks and bonds in general have been falling for months. And if Grantham’s assessment of the situation is correct, this year will also be remembered as the beginning of a not-so-ordinary recession in the U.S. economy.
Markets are preparing for something less dramatic, though still unpleasant. The head of the Fed could finally convince the public that monetary policy will quickly tighten in the fight against inflation. That hit rate-sensitive tech stocks, with the Nasdaq already down 12.42% from its August peak and 28.79% from its all-time high.
But other securities are also getting cheaper. The market fears that the Fed will make a mistake with tightening policy and overreach, sending the economy into recession. Strong economic statistics, which seem to say that the chances of a “soft landing” are growing, are perceived by them as an indication that the regulator, encouraged by it, will get carried away. MSFT stock prices today should not suffer because of this.
Important indicators which show what is happening and which influence the MSFT stock price today
The ISM Non-Manufacturing PMI rose to 56.9 in August, the second consecutive increase after three months of decline. Analysts had expected a drop to 55. This was good news for the economy and bad news for the market.
U.S. Treasury yields soared to 3.365%, back to mid-June levels. In 2 years it rose to 3.522%, again at last week’s peak when it rewrote its high from 2007. The futures market immediately overestimated the likelihood of a 75bp rate hike at the Fed’s next meeting. According to the CME FedWatch Tool, the odds of that rose to 74% from 57% in the previous trading.
This contributed to the decline in stocks — and the Dow Jones Industrial Average closed 0.55% and the S&P 500 was down 0.41%. They also noticeably moved away from their August peak: the Dow fell 9.15% and the S&P 500 rose 9.64%. Also, keep in mind that MSFT after-hours stock prices are usually different than during business hours.
Nevertheless, the broad market index has so far managed to close above strong support around 3,900 points, although it looked lower yesterday. That level has been under the radar of many since early September. For more on what’s going on in the stock market, check out Letizo News. There you will find out what’s the price of NFLX stock, as well as a lot of other important information.
