Stocks Jolted by Recession Fears in Rush for Haven

The caution born from rising rates held firm as data showed prices paid to US producers rose more than forecast in April, reinforcing bets the Fed will further tighten policy.

‘Going Lower’

While the main American equity indexes have lost more than $6 trillion since March 29, Mark Mobius told CNBC the S&P 500 is “probably going to go lower,” adding that “we are not at a bottom, but may be at the beginning of one. A bottom needs everyone to give up hope.”

For Citigroup strategists, growth stocks — including the battled tech sector — will likely remain under pressure as central banks tighten policy.

The greenback rose against all but one of its major peers amid growth fears.

The euro hit a five-year low, the Swiss franc weakened to reach parity with the dollar for first time since 2019 and Hong Kong’s Monetary Authority intervened to defend its currency peg. Only the yen — a traditional haven that, in an ironic twist, has not acted in that role so much of late — at one point jumped close to 2%.

Comments:

“Right now, confidence is shaken among market participants and people are in no mood to take on risk,” wrote Fawad Razaqzada, an analyst at City Index and FOREX.com. “Even when we see periods of relative calm, it doesn’t last very long.”
“It’s a really hard ride for retail investors, really hard,” said Craig W. Johnson, chief market technician at Piper Sandler.
“Even though we should reach peak inflation soon, the issue of inflation is not going to subside enough to avoid stagflation from becoming a bigger problem,” said Matt Maley, chief market strategist at Miller Tabak + Co. “Therefore, any near-term bounce should be sold, even if that bounce lasts a couple of weeks.”

Key Events, Market Moves

Here are key events to watch this week:

University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

The S&P 500 fell 1.4% as of 2:20 p.m. New York time
The Nasdaq 100 fell 1.7%
The Dow Jones Industrial Average fell 1.4%
The MSCI World index fell 1.6%

Currencies

The Bloomberg Dollar Spot Index rose 0.5%
The euro fell 1.3% to $1.0372
The British pound fell 0.5% to $1.2192
The Japanese yen rose 1.2% to 128.35 per dollar

Bonds

The yield on 10-year Treasuries declined seven basis points to 2.85%
Germany’s 10-year yield declined 15 basis points to 0.84%
Britain’s 10-year yield declined 16 basis points to 1.66%

Commodities

West Texas Intermediate crude rose 0.3% to $106 a barrel
Gold futures fell 1.7% to $1,821.90 an ounce

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