Consumer confidence in the economy sees a sharp fall, leading to a broader market correction on Tuesday. Market loses steam as there’s no catalyst to support the recovery.
The US stock indices head lower for the second consecutive day with the Dow Jones Industrial Average (INDEXDJX: .DJI) tanking 1.56% or roughly 500 points on Tuesday, June 28. With yesterday’s drop, the Dow Jones has dropped under 31,000 levels.
Similarly, the S&P 500 (INDEXSP: .INX) tanked by over 2% ending at 3,821 levels. The tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) crashed 3% or 343 points. Earlier in the day, all three indices were up but switched lower after the release of disappointing economic data. It seems the markets are entering a correction zone once again after last week’s rebound.
The Consumer Confidence Index fell to 98.7 from over 103 points in May. It is also lower than the Dow Jones estimate of 100. The declining consumer confidence comes as fears of recession have been growing fast. The Fed is mulling aggressive rate hikes ahead this year to bring inflation under its control and its target of 2%. Chris Zaccarelli, chief investment officer for Independent Advisor Alliance told CNBC:
“Right now we are at an inflection point in the economy, where actual spending and economic activity is still positive, however, consumer confidence and financial conditions (especially interest rates) are indicating a slowdown ahead. If we are able to avoid a recession then the stock market is fairly valued, however, if we do go into recession then we would expect the lows for the year haven’t been hit yet.”
Is the Bear Market Rally Over?
Commenting on last week’s market recovery, some analysts were saying that it was just a temporary bounce back, and markets could be heading even lower. Also, there hasn’t been any clear catalyst behind last week’s market rebound. Chris Verrone, technical analyst with Strategas adds:
“One of the trickier calls in this business is evaluating the difference between a bounce in a bear market vs the start of a more durable advance. The current bounce, +8% over the last 4 trading days, has been impressive on the surface as most moves of this context tend to be, but again has yet to signal any resounding internal or leadership improvement.”
After the release of the consumer confidence data On Tuesday, retail stocks witnessed a sharp correction. Lowe’s fell 5.2%, Bath and Body Works (NYSE: BBWI) fell by 5.8%, while Macy’s Inc (NYSE: M) and The Home Depot Inc (NYSE: HD) each lost 4%.
Footwear giant Nike (NYSE: NKE) issued weaker-than-expected revenue guidance for the current quarter. Following it, shares of Nike corrected by 7%. Chip stocks also witnessed a major decline after analysts said that Apple Inc (NASDAQ: AAPL) might start using its own chipsets for iPhones starting in 2023.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Source: https://www.coinspeaker.com/dow-jones-tanks-500-points-bear-market-rally-end/