Stock market quest to stand firm against everything comes apart
BNN Bloomberg
The pain tolerance of stock bulls may be formidable, but it isn’t endless.
The pain tolerance of stock bulls may be formidable, but it isn’t endless.
That became apparent Friday, when after standing firm against a week’s worth of steadily worsening news, major indexes finally gave up weekly gains and slipped resoundingly into the red. Two days of Federal Reserve hectoring softened resolve before a dose of geopolitical panic pushed the S&P 500 down 75 points and capped the biggest two-day drop in 16 months.
In the end, the heft of the pressure brought to bear against a market that at times this week traded within 5 per cent of a record became too great. Fed policy makers, emboldened by the worst inflation in four decades, upped their hawkish rhetoric. On Friday, National Security Advisor Jake Sullivan said the U.S. believes Russia could take offensive military action or attempt to spark a conflict inside Ukraine as early as next week.
It was like “a combination punch that felled a heavyweight boxer,” said Sam Stovall, chief investment strategist at CFRA. “So you had higher CPI, you had hawkish comments by a voting Fed member, combined with elevated geopolitical tensions, and those three have knocked the bull down for the count.”
Thursday and Friday’s selling represented the worst break in a two-week rebound that at times seemed to suggest investors were finding ways to live with the turn in the Fed’s hiking cycle. Even with the plunge, an equal-weighted version of the S&P 500 ended the week only down 0.2 per cent, testament to the market’s buoyancy since its worst January since 2009.
