At the end of a wild week of trading on Wall Street, the S&P 500 is roughly back where it started, but the lessons tortured investors learned over those five days could determine what happens next. The S&P 500 had its worst day of 2022 on Monday and its best day of 2022 on Thursday. On Monday, the 10-year Treasury yield fell below 3.7% and ended near 4%. Wall Street’s “fear gauge” – the CBOE Volatility Index – actually ended the week lower despite surging to 65 on Monday, its highest level since 2020. After falling less than 0.1% on Friday, the market appears to have stabilized. Tim Hayes, chief global investment strategist at Ned Davis Research, said in a report on Thursday that “global inflation is currently under control and there is insufficient evidence of recession. Recent volatility has caused a weak correction but lacks the characteristics of a bear market. .SPX 5D mountain standard The S&P 500 ended the week almost flat. There are signs below the surface that the market is actually doing well, with Bespoke Investment Group highlighting on Friday that more than two-thirds of stocks in the S&P 500 are still trading above their 200 level. Moving averages, this is a sign of strength for chart watchers In the bond market, interest rate swings don’t appear to be scaring investors in high-quality corporate debt, said Gennady Go, head of U.S. rates strategy at TD Securities. “Investment grade spreads remain unchanged,” Gennadiy Goldberg, a senior economist at DePauw, told CNBC. “The VIX had its biggest single-day spike ever, but IG Credit didn’t really expand significantly. I think it has to do with investors being really a little skeptical of certain parts of the stock market movement. ” .VIX 5Y CBOE Volatility Index, 5 Years Even in Japan – where stocks and the yen saw big swings late last week and into this weekend – there were signs of resilience. After Monday’s dozens of After its worst day in a year, the Nikkei 225 ended the week down less than 3%, said Jeremy Schwartz, chief global investment strategist at WisdomTree: “This is a 1987-style crash. But the 15 basis points move by the Bank of Japan does not appear to have changed the real fundamental outlook for these companies,” he told CNBC, referring to the Bank of Japan’s interest rate hike last week. One basis point is equal to one hundredth (0.01%). Reasons for concern, however, that the market’s recent weakness, which culminated in Monday’s sharp losses, suggests some of the key drivers of this bull market are running out of fuel. “The recovery may last a week or so, but eventually, stocks will hit new lows…The storyline for tech stocks and the global economy related to artificial intelligence is likely to get worse, not better,” BCA Research chief Others warned that some of the issues that led to the initial decline, such as the unwinding of the yen carry trade, would be compounded by seasonal market weakness in the coming weeks. The fortunes of the coming U.S. election are mixed, Wellington Shields technical analyst Frank Gretz said in a note to clients: “Escape from these sharp selloffs is a process in itself, as recent action has shown. “This process often involves so-called ‘test’ lows, or even lower lows. All of these can cause a bit of disruption to seasonal patterns, which are not much of a prize in themselves.” Trading action throughout the week, Several weak closes in the last hour or two of trading, for example, raised eyebrows. Even this week’s backlash has raised some eyebrows. Tom Fitzpatrick, managing director at RJ O’Brien & Associates, said in a note to clients that Thursday’s rebound after the often-ignored weekly jobless claims report showed that “the market has Collapse” and the rally will not last. “The bias here is for further strength in the short term before another possible loss,” Fitzpatrick said.
