Topline
The stock market was mixed in choppy trading on Tuesday even as investors returning from the holiday weekend faced renewed fears of a looming global recession, especially amid warning signs in the bond market as the closely watched yield curve inverted.
Who said men don’t cry? Investors are still “very anxious” and markets are choppy amid rising … [+]
Key Facts
Stocks pared back losses: The Dow Jones Industrial Average fell 0.4%, over 100 points, while the S&P 500 gained 0.2% (after declining as much as 2% earlier in the day) and the tech-heavy Nasdaq Composite jumped 1.8%.
Investor sentiment took took a hit after the bond market flashed a major recession warning, with the benchmark 10-year Treasury note trading below the short-term 2-year Treasury, a so-called yield curve inversion.
A closely-watched recession indicator on Wall Street, the yield curve has already inverted twice so far this year, first on March 31 then again briefly in mid-June.
Markets are coming off of their worst first half of a year since at least 1970, with the S&P 500 in bear market territory as surging inflation and rate hikes from the Federal Reserve stoke rising recession risks.
Though U.S. markets were closed for the July 4th holiday, global recession fears continued to rise after volatile trading in European markets, with the euro sliding to a 20-year low against the U.S. dollar on Tuesday.
“Most people are still looking at market advances with skepticism,” and sentiment is “hardly bullish,” says Vital Knowledge founder Adam Crisafulli. “Investors are very anxious about the approaching earnings season,” he notes.
Crucial Quote:
“Stocks are poised to open back up in the red for the quarter . . . welcome back to 2022,” said Bespoke Investment Group in a recent note. “Recession fears are front and center again this morning, especially in Europe as concerns of natural gas shortages heading into the winter months put the likelihood of recession as near certain with the only question being how long and how deep.”
Tangent:
Shares of Tesla rose nearly 3%, meanwhile, even after the company said it sold just over 250,000 electric vehicles in the second quarter of 2022—an 18% drop from around 310,000 in the previous quarter. With the electric vehicle maker struggling to ramp up deliveries and posting numbers that were “materially less” than expected, Tesla’s stock could plunge another 40% by the end of the year, analysts at JPMorgan warned.
What To Watch For
A big slate of economic data this week. Investors will be watching closely for the release of the June jobs report on Friday, with job growth expected to slow to 250,000 nonfarm payrolls added (down from 390,000 in May), according to estimates from Dow Jones. The Federal Reserve will also release minutes from its latest policy meeting on Wednesday.
Further Reading:
Stocks Close Out Worst First Half Of A Year Since 1970 (Forbes)
Stocks Are Crashing But History Shows This Bear Market Could Recover Faster Than Others (Forbes)
Dow Plunges Nearly 500 Points, Recession Fears Resume As Consumer Confidence Hits New Low (Forbes)
