July 7, 2022

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Wall Street struggles for direction on growing recession fears

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U.S. stocks indexes were mixed on Thursday as gains in healthcare and megacap technology stocks offset losses in energy and other economically sensitive sectors amid growing recession fears.

Trading has remained volatile after a bruising selloff last week sparked by concerns that aggressive interest rate hikes to tame stubborn inflation could hurt economic growth and corporate profits.

As government bond yields fell to two-week lows, rate-sensitive growth and technology stocks gained, with Apple Inc adding 0.8% and Microsoft Corp 0.9%.

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Sectors considered as safer bets in equities such as healthcare, consumer staples, real estate and utilities gained more than 1%, while energy stocks slid 4.7% as crude prices fell $1 a barrel.

“You’re in the bottoming process and you’ll get these little bounces,” said Aaron Clark, portfolio manager at GW&K Investment Management.

The benchmark S&P 500 has struggled to make a headway after it confirmed a bear market last week, marking a 20% decline from its record closing peak in January.

“What we really need is for earnings estimates to come down … to establish a good bottom. Despite all the talks of recession, earnings revisions are still positive so far this year.” In his second day of testimony to Congress, Federal Reserve Chair Jerome Powell said the central bank’s commitment to rein in 40-year-high inflation is “unconditional” but it comes with the risk of higher unemployment.

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Big Wall Street banks Citigroup and Goldman Sachs now see a bigger chance of a recession.

Rising inflation is also taking a toll on consumer…


2022-06-23 13:19:49

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