After the crash, with a drop on Wednesday without equal since 2020, in the midst of the pandemic, the stock market in the United States stabilized. Despite curbing losses, it continued to trend downward yesterday, an expression of volatility that, according to many analysts, is the specter of the specter of recession that is lurking.
The indices of the S
This swing is nothing more than a reflection of the great uncertainty of investors in the face of the prospect that growth and inflation lead the Federal Reserve (Fed) to further dismantle the stimulus measures that have helped propel the US economy in the last two years.
The fear of recession increased in the parquet with the poor quarterly results of distribution companies such as Target and Walmart, which marked a reversal on Wednesday of the positive session of the previous day.
These retail giants said profits were hurt by rising costs, slow sales and supply chain problems, accentuated by the war in Ukraine and China's covid lockdown measures.
Target shares sank 25% on that black day as it announced earnings well below analysts' forecasts. The losses continued this Thursday, but in a much more moderate way. Walmart also halted the decline. All this represents a change, since consumption has been the great engine of the recovery.
Stock indices have been declining in response to interest rate hikes agreed by the Fed to combat rising prices. Jerome Powell, Chairman of the Federal Reserve, said that the determination of this institution to tame inflation cannot be doubted. He even remarked that, if necessary, they will force an increase in unemployment.
"We're really looking at the fear of inflation this year, and essentially the concern is that the Fed is going to stifle growth along with inflation," strategist Garrett Melson told The Wall Street Journal.
Former Goldman Sachs chief executive Lloyd Blankfein warned this week of "very high risk of recession." The director of Wells Fargo, Charlie Scharf, considered that "there is no doubt" that the US economy. it is going backwards, and Ben Bernanke, former president of the Fed, predicted a “stagflation”, which combines an economic slowdown and high prices.
The fall in stocks on fears of a slowdown sent investors to the refuge of government bonds.
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