Bear Archives - Page 2 of 2

May 23, 2022

Stocks rise to recover from bear market brink

U.S. stocks rose Monday, with equities coming off a seven-week losing streak on more solid footing as investors shook off some recent volatility and digested fresh trade-related remarks from the Biden administration.

The S&P 500 rose by more than 0.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} just after market open . The index had closed out Friday’s session flat on the day but down 18.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from its Jan. 5 record closing high to come within striking distance of a bear market, defined once an index closes at least 20{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from a recent all-time closing high.

The Dow gained more than 200 points, or 0.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, and the Nasdaq also increased shortly after market open. The moves to the upside came after President Joe Biden said he was considering easing tariffs on Chinese goods that had been imposed during the prior administration. Biden’s remarks, made during a news conference with Japanese Prime Minister Fumio Kishida, came in turn after Treasury Secretary Janet Yellen said last week that she was encouraging the Biden administration to remove the tariffs she said imposed “more harm on consumers and business” in the U.S.

The possibility of some easing of tariffs while the U.S. economy grapples with decades-high rates of inflation helped at least temporarily boost risk assets that had been battered in recent weeks by jitters over rising prices, more aggressive Federal Reserve monetary policies and international concerns in Ukraine and China. As of Friday, the S&P 500 had also posted a seventh consecutive weekly loss last week in its longest losing streak since 2001. And at its worst point on Friday, the index sank as much as 20.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from its January record high to trade in bear market territory.

Traders work on the floor during the opening bell of the New York Stock Exchange in New York City on May 16, 2022. - US stocks were off to a downbeat start Monday following the rally in the prior session, as concerns about growth in the domestic and global economies continue. (Photo by TIMOTHY A. CLARY / AFP) (Photo by TIMOTHY A. CLARY/AFP via Getty Images) — Traders work on the floor during the opening bell of the New York Stock Exchange in New York City on May 16, 2022. – US stocks were off to a downbeat start Monday following the rally in the prior session, as concerns about growth in the domestic and global economies continue. (Photo by TIMOTHY A. CLARY / AFP) (Photo by TIMOTHY A. CLARY/AFP via Getty Images)

Since World War II, there have been 12 formal bear markets for the S&P 500, and 17 including “near bear markets,” or periods when the index fell by more than 19{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, according to LPL Financial Chief Market Strategist Ryan Detrick. Of these, the average drop was about 29.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, and lasted an average of 11.4 months.

However, when bear markets coincide with recessions, they tend to be worse, falling 34.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} on average and lasting 15 months, Detrick added. A recession tends to be considered after two consecutive quarters of negative GDP (gross domestic product) growth.

Traders are set to receive the second estimate of first-quarter U.S. GDP later this week, which was reported last month in the first estimate to have contracted at a 1.4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} annualized rate. More recent economic data have shown some pockets of strength, however, with retail sales and some manufacturing data coming in strong, while employment data have started to soften.

“I do think that the economy is better right now than the stock market is telling you,” Rhys Williams, Spouting Rock Asset Management Chief Strategist, told Yahoo Finance Live on Friday. “And my guess is we’re going to muddle through on both stocks and bonds over the summertime.”

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9:32 a.m. ET: Stocks open higher

Here were the main moves in markets as of 9:31 a.m. ET:

S&P 500 (^GSPC): +32.49 (+0.83{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 3,933.85
Dow (^DJI): Open to 31,261.90
Nasdaq (^IXIC): +48.89 (+0.43{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 11,403.51
Crude (CL=F): -$0.33 (-0.30{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $109.95 a barrel
Gold (GC=F): +$10.30 (+0.56{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $1,852.40 per ounce
10-year Treasury (^TNX): +5.2 bps to yield 2.8390{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}

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7:23 a.m. ET: Stock futures gain more than 1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}

S&P 500 futures (ES=F): +47.5 points (+1.22{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 3,947.00
Dow futures (YM=F): +346.00 points (+1.11{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 31,559.00
Nasdaq futures (NQ=F): +127.25 points (+1.07{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 11,968.00
Crude (CL=F): +$1.08 (+0.98{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $111.36
Gold (GC=F): +$16.90 (+0.92{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $1,859.00 per ounce
10-year Treasury (^TNX): +4.6 bps to yield 2.833{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.

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May 22, 2022

It May Be a Bear Market, But It’s Not a Panic. That’s Worrisome

(Bloomberg) — It is been difficult to check out, extremely hard to predict and a nightmare to trade. But has the S&P 500’s slide been an unqualified worry to date? By some actions no, and that may bode poorly for equities in the close to expression.

Most Read through from Bloomberg

Even with the US stock benchmark plunging 20{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from a file for the to start with time given that March 2020, trading volume has been very common and the Cboe Volatility Index is beneath this month’s highs. In the meantime, the Cboe SKEW Index — implied volatility for bearish S&P 500 place contracts relative to phone calls — is shut to two-yr lows.

The relative lack of anxiety is not essentially a good factor, from contrarian lenses. That the S&P 500’s path has remained somewhat orderly without having any apparent sings of panic suggests that the base isn’t yet in watch, according to AlphaTrAI’s Max Gokhman. Layer on a Federal Reserve that is intent on hunting earlier the turmoil in pursuit of tighter economic problems, and the outlook is gloomy.

“Investors holding their breath could wind up passing out due to the fact there’s much more to this fall prior to the roller-coaster calendar year commences grinding back up,” claimed Gokhman, the firm’s main expense officer. “With the Fed as the ride’s operator, we shouldn’t be expecting a gentle glide back to the station. Only a person-third of tightening cycles finished without having a economic downturn and they all began when inflation was underneath 3.3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.”

Not Rushing for the Exits

The drop in shares has not been accompanied by a surge in buying and selling. Volume on US exchanges has not spiked this week as the S&P 500 fell a different 4.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. It’s remained in line with stages observed all over the tumultuous year.

“Volumes are not remarkable or overpowering. I desire to see a quantity surge to sense additional assured about a bottom,” stated Chris Murphy, co-head of derivatives method at Susquehanna Intercontinental Group. “We commonly see much more volume at a serious lower as a signal of capitulation.”

‘Fear Gauge’ Has But To Tremble

“We have worry, we have doubt, we have angst, but we really do not have capitulation. We really don’t have individuals dumping shares still, and I assume that will occur,” SentimenTrader’s analyst Jay Kaeppel claimed in a Bloomberg Television job interview Friday. “Wake me when it hits 45, because if you search at heritage, all the huge declines, it spikes to 40 or 45, so 30 isn’t going to do it.”

The VIX is now all over 32.

Julian Emanuel, chief fairness and quantitative strategist at Evercore ISI, is observing 3 points for indicators of capitulation: the VIX previously mentioned 40, the put/get in touch with ratio reaching 1.35, and share quantity earlier mentioned 20 billion.

“The end of corrections are usually accompanied by dread and capitulation — extreme volatility and buying and selling quantity,” he wrote in a the latest note.

Craig W. Johnson, main market technician at Piper Sandler, is also searching for the VIX to hit 40, and is employing a proprietary technical indicator he’s dubbed the “40-week method,” which actions how several shares are earlier mentioned or beneath their 40-7 days going averages. That gauge has dropped to 13{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} and he’s waiting for a “sub-10{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} washed-out studying.”

“We have found readings down below 10{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} have traditionally signaled the broader market is near an inflection position,” he wrote in a observe.

One-Shares Indicators

The Cboe SKEW Index — implied volatility for bearish S&P 500 place contracts relative to calls — is close to the least expensive considering that April 2020. In the meantime, the place-to-phone ratio that tracks the volume of alternatives tied to specific firms has jumped to 1.27, nevertheless beneath the threshold Evercore’s Emanuel is viewing for.

“Even if index volatility is not cracking, you are looking at it in one stocks,” said Amy Wu Silverman, an fairness derivatives strategist at RBC Funds Marketplaces. “If solitary stocks is cracking, ultimately this sales opportunities up to the index amount.” Wu pointed to reactions in Walmart Inc. and Goal Corp. as examples — both before this week posted their major put up-earnings drops in many years.

Maintaining a Near Eye on Valuations

Mike Mullaney, director of world-wide marketplaces investigate at Boston Companions, says there is likely for further more margin contraction. “There’s most likely additional downside for the marketplace appropriate now than there is upside,” he explained by cellular phone.

He’s heading to be hunting for analyst revisions to occur down and valuations having decreased.

“The $64,000 concern is whether or not we can realize a soft landing or are heading to get pushed into a economic downturn,” he reported. “We’re more in the recession camp than we are in the tender-landing camp if the Fed would like to get to their inflation targets.” A economic downturn could press the S&P 500 earnings multiple to close to 13, and that could signal an area where “pretty much everything has been discounted in the market place.”

Most Read through from Bloomberg Businessweek

December 5, 2021

Meta Nears Bear Market After $224 Billion Value Wipeout

(Bloomberg) — Facebook parent Meta Platforms Inc. dropped on Friday, bringing its shares closer to a bear market after months of volatility triggered by a whistle-blower’s revelations and disappointing quarterly results.

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The selloff was 19.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} since its closing record on Sept. 7, erasing about $224 billion in market value. Meta’s stock has been pressured this week as investors grappled with uncertainty surrounding the omicron variant and the possibility that the Federal Reserve will end its pandemic support program sooner than expected. It closed 1.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} lower to $306.84 on Friday, paring an earlier drop of as much 3.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.

Meta shares have been hurt in recent months by negative comments about Facebook’s business model from whistle-blower Frances Haugen, according to David Trainer, who covers Meta for investment research firm New Constructs. Haugen appeared before the House subcommittee on technology earlier this week, after accusing the social media giant of putting “profit over safety” of its users in October.

Mounting concerns about the impact of Apple Inc.’s data collection rules and supply-chain challenges have also contributed to the decline and spurred Meta’s biggest drop in nearly a year in October.

Meta shares fell 7.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} for the week, suffering their worst weekly decline since June 2020.

A weaker-than-expected quarterly report released in October also hurt investor sentiment. The company’s third-quarter revenues fell short of consensus estimates, as did its expectations for the fourth quarter. Several analysts trimmed their price targets for the stock in the wake of results, though they remained broadly positive on the firm, citing its long-term growth potential and valuation.

Prior to the pandemic-driven market rout last year, the company last entered a technical bear market in June 2019, when the U.S. Federal Trade Commission began an investigation into potential antitrust violations.

Still, the stock rallied through the pandemic and had been on a tear this year, rising 42{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from Jan. 4 to its Sept. 7 peak, outperforming peers like Twitter Inc. and Netflix Inc. But its recent plunge has the shares trading around 19.8 times forward earnings, making Meta the cheapest stock among mega-cap U.S. technology companies.

Newbridge Securities Chief Market Strategist Donald Selkin said Meta appears reasonably valued at current levels, with the decline discounting a lot of the bad news surrounding Facebook.

“It’s worth sticking your toe in the water,” he said in a phone interview.

The lower valuation doesn’t make the stock more attractive to Trainer of New Constructs, who views Meta as the worst positioned company among its mega-cap peers. He expects the stock to be a “perennial underperformer” for the next several years given the headwinds at the legacy Facebook business. Trainer said he is interested to monitor the company’s shift in focus toward the metaverse, especially the pace of the transition as competition in the field increases.

Yet, Meta has so far held on to its fans on Wall Street, with more than 80{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of analysts recommending that investors snap up shares, according to data compiled by Bloomberg. The stock’s 12-month average analyst price target of $400 implies about 31{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} return potential from current levels.

(Updates share price moves throughout and chart.)