S&P 500, Dow 30 and Nasdaq, the three major US equity indices have been under pressure since the start of 2022. For the first time since late March 2021, the S&P 500 ended below 4,000 to close Monday’s session at 3 991.24 while the Nasdaq closed at its lowest level since November 2020.
The S&P 500, Dow 30 and Nasdaq Composite fell 3.2%, 1.99% and 4.29% respectively.
As Dennis Gartman, the former editor of the influential “The Gartman Letter” and chairman of the University of Akron’s endowment, puts it on a Bloomberg Radio show – “US stocks are down and one day it will There will be a violent 5-6% drop and that will be the final selling pressure that will end the bear market.If that happens and it will be a good time to buy, that remains to be seen. Gartman, by the way , has been bearish since January 5 of this year.
The stock market selloff may be due to rising interest rates, which tends to drive down valuations of megatech stocks. The era of easy liquidity witnessed since March 2020 seems to be over and the easy money environment seems to be fading.
Speaking of heavyweight stocks, Apple (AAPL) stock price fell 3.3% while Microsoft Corp (MSFT) fell 3.7% and Tesla Inc (TSLA) fell. by 9.1%. Together, some of the world’s biggest tech companies have already lost more than $1 trillion in value in just three trading sessions.
The only bright spot for Tuesday trading hours is that US futures are green with Nasdaq futures up 1.73%.
Following the Federal Reserve’s 0.5% interest rate hike, investors are awaiting what steps the central bank should take to bring inflation under control at its upcoming FOMC meeting. Discussions of recession in a highly inflationary environment, Ukraine’s invasion of Russia, oil prices and supply chain issues are already underway.
Long-term investors know that the stock market is not a one-way street and there will be ups and downs, corrections and even stock market crashes. However, as the data shows, stocks tend to drift higher over the long term. Buying stocks when valuations are low may be a better approach to long-term wealth accumulation. With the changing dynamics of the economy, it is equally important to pick the right stocks and hold onto them for better fortune.