Wall Street: The S&P 500 returns near its annual lows


(CercleFinance.com) – The New York Stock Exchange opened in the red on Friday, still penalized by the confirmed rise in bond yields and the renewed strength of the dollar.

At the end of the morning, the Dow Jones fell 1.4% to 29,642.3 points, while the Nasdaq Composite fell 1.6% to 10,887.5 points. At the same time, the S&P 500 dropped 1.7% to 3691.8 points.

Investors are trying to gauge the implications of the current monetary tightening environment, which is reflected not only in a surge in long rates but also in a surge in the dollar.

On the bond compartment, the yield on ten-year Treasury bills exceeded the 3.77% threshold this morning, a peak since the 2008 financial crisis.

On the exchange side, the dollar recorded, at nearly 0.97 euro, a new historic record against the single currency.

The rise in bond yields and the greenback is likely to penalize US equities by increasing the appeal of ‘Treasuries’ and penalizing the most exporting stocks.

The rise in US bond yields and the dollar has accelerated this week in response to aggressive Fed decisions and statements on inflation.

In this context, the good resistance of the PMI activity index does not help matters.

This composite index compiled by S&P Global – which measures overall activity based on the responses of purchasing managers of companies in the sector – exceeded expectations, reaching 49.3 this month, against 44.6 in August.

The mood cooled a little more when Goldman Sachs announced that it had lowered its end-of-year target for the S&P 500 index, reduced to 3,600 points against 4,300 points so far.

The S&P, a very broad index followed by many fund managers, has already lost more than 22% of its value since the start of the year. It is now trading at a level close to its annual low (3666 points) after breaking the key technical support of 3900 points.

Given the current gloom, it seems very difficult to determine what will be the next major technical supports for the index.

‘Looking at the risk/reward profile from a long-term investor’s point of view, we believe that the worst possible scenario would bring the S&P 500 back into the 3000-3200 zone (without this happening). necessarily produce)’, says Mike Gibbs, head of technical analysis at Raymond James.

According to the analyst, this retracement would correspond to the average fall of 33% observed on the stock markets during periods of recession.

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