Wall Street future are down again Thursday as stark warnings from some of the world’s biggest retailers spotlighted rampant inflation, fueling stagflation fears.
“Target and Walmart coming out with disappointing numbers has really, really spooked people,” said Close Brothers Asset Management’s Chief Investment Officer Robert Alster. “We are going to see a raft of downgrades to U.S. GDP (forecasts) now… it really looks like we are running into a faster slowdown than we expected.”
The S&P 500 had lost 4% on Wednesday while the Nasdaq had fallen almost 5% as interest-rate sensitive megacap stocks Amazon, Nvidia, and Tesla dropped close to 7% and while Apple tumbled 5.6%.
The focus remained on what central banks will now do as they walk the tightrope of trying to regain control of inflation, which is now at 40-year highs… without causing painful recessions.
U.S. stock index futures fell on Thursday, signaling more selling on Wall Street as investors kept a close eye on the impact of rising inflation on the U.S. economy and corporate earnings.
The S&P 500 index and the Dow Jones Industrial Average on Wednesday logged their biggest one-day percentage loss since June 2020 after dismal results from retailer Target Corp underscored just how hard inflation is biting consumers.
Goldman Sachs strategists estimated a 35% probability of the U.S. economy entering a recession in the next two years, while Morgan Stanley’s latest research showed a 25% probability for a recession starting in the next 12 months.
Megacap tech and growth shares such as Apple Inc, Microsoft Corp, Amazon.com, Alphabet Inc and Tesla Inc slipped between 1.1% and 2.4% in premarket trading.
MacDailyNews Take: It was nice of God to allow Jimmy Carter to live long enough to see this.
‘Tis best to get a handle on inflation, if you know how, while you still can. – MacDailyNews, May 11, 2021
Stop the misguided crusade against domestic energy production and profligate federal spending and inflation will be stopped dead in its tracks. It’s not difficult. – MacDailyNews, May 11, 2022
Earlier this year, Interactive Brokers founder Thomas Peterffy said, “Inflation is 7% — 1% or 2% [in interest rate hikes] doesn’t mean anything. If they really wanted to stop inflation, they would have to raise rates to 4%, 5%, 6%.”
Inflation is repudiation. — Calvin Coolidge
When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill. And when government does it for 40 years, the bill comes in two ways: higher taxes and inflation. Make no mistake about it, inflation is a tax and not by accident. — Ronald Reagan
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