Five Days Of Losses Test Traders' Nerves For S&P 500

The stock market experienced significant volatility as investors debated whether the possibility of a soft landing still existed in the midst of the Federal Reserve's most aggressive tightening drive in a generation.

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The most recent round of economic figures, which were at best conflicting, didn't do much to reassure Wall Street. The S&P 500 experienced a recovery of almost 1% before it fizzled out, falling back below its crucial 4,000 mark and heading toward its longest losing streak since December.

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The primary offenders are the same megacap group that earlier propelled the market upward, with trade being severely impacted by losses at Apple Inc. and Tesla Inc. EBay Inc. fell as its outlook hinted that a sales return will take longer, while Netflix Inc. fell on promises to lower subscription prices in over 100 countries. The shares increased by up to 15% after Nvidia Corp. issued an optimistic sales outlook.

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When a wild market rise hit a wall this month, retail traders have adopted the negative stance that dominated their outlook for much of last year. The bull-bear spread from the American Association of Individual Investors poll changed to -17 in the week ending Feb. 22, the most gloomy posture since the year's beginning, after two weeks of lukewarm optimism.

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According to Fiona Cincotta, senior financial markets analyst at City Index, "the market is worried about the Federal Reserve needing to hike interest rates for longer, which is why we haven't seen that amazing rise from the start of the year continue." "That's clearly affecting risk sentiment and harming stock demand."

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Cliff Asness, a billionaire quant investor, cautioned that US stocks are susceptible to a macro shock if inflation doesn't exhibit the ferocious decrease that the market anticipates. According to the co-founder of AQR Capital Management, despite last year's falls, equity prices are still high in comparison to the past because it is widely believed that price rise will slow down.

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According to Jamie Dimon, there is still a potential for a soft landing for the US economy despite the challenges it faces. According to the CEO of JPMorgan Bank & Co., "the American economy is doing rather well right now - people have a lot of money, they're spending it, and jobs are numerous." "There's some scary things in front of us."

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American GDP in the fourth quarter was less than anticipated, and desired inflation rates for the Fed increased. While the sudden decline in personal spending raised worries about the well-being of American consumers, it also gave rise to optimism that the economy was slowing in a way that would be consistent with a soft landing. Separate data indicated that the labor market is incredibly tight.

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According to Michael Shaoul of Marketfield Asset Management, investors are torn between appreciating the signs that the US economy is still on solid ground and worrying that these signs would elicit a harsh response from authorities.

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Even though recent economic statistics and company results reflect that although growth has slowed from the stimulus-driven boom, we have not yet entered a time of visible weakness, the threat of a quick worsening of the economic cycle appears to have been put to rest, he continued.

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In other business news, Domino's Pizza Inc. had its biggest drop in value in more than ten years as a result of delivery issues and weakening demand, which caused fourth-quarter sales to fall short of Wall Street forecasts and forced management to lower revenue growth plans. After falling far short of experts' predictions, Moderna Inc. maintained its expectation for at least $5 billion in Covid-19 vaccine sales this year.

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Also, Bitcoin is on track to post its second monthly gain, defying the trend of stocks and other riskier assets that have fallen due to resurgent worries about interest rate hikes. The recovery in the cryptocurrency market only partially makes up for the ground lost in 2018, when prices fell and investors withdrew as a result of the failure of the FTX exchange.