Jimmy Damon upset Wall Street the most with his depression

After New York stock indices lost several percent on Friday (with the release of new data from the labor market, which remains very strong despite the tightening of interest rates), the start of the new week was also marked in red. The Nasdaq tech index fell 1 percent on Monday, with semiconductor stocks such as Nvidia mainly down. On Tuesday, the Nasdaq lost an additional percentage and reached a new low since July 2020. This year it is already down 32 percent, and the S&P 500 Elite (Tuesday -0.65%) is down 24. Analysts got some hope after two days of Extraordinary growth at the beginning of last week (the S&P 500 rose 5.7 percent on October 3 and 4, but then began to lose again). At Charles Schwab, they write that since 1960, 11 times out of 14 cases, the market has been higher for half a year after such high growth for two days.

What is the rise in inflation in September?
The main concern now is the (also) rapid tightening of monetary policy. The next Fed will meet in early November, and the vast majority expect we will see another 0.75 percentage point increase in the fed funds rate. Expectations may differ with Thursday’s release of US consumer inflation for September. Remember that the CPI rose 8.3 percent year-on-year in August, and the announcement sparked a big sell-off on Wall Street. At the end of the week, the season for publishing quarterly business results also begins, as has been the practice in recent years, first with the new balance sheets of the largest US banks. Analysts expect S&P stock earnings to rise 4.1% in the third quarter (compared to the same period last year), well below expectations from early July (+11.1%).

Searching for a knife and hoping for an imminent transformation
Times have certainly changed and investors should voluntarily get used to it. When the values ​​of all investments go up, as was just the norm in the period after the 2008 financial crisis, it is easy to invest because profits are virtually guaranteed. But this year, the market was not just a correction (it was expected for a long time), but a real downtrend, and now investors are trying to catch the falling knife (a common metaphor for investing when prices drop) and, of course, hope for an imminent reversal when the moves are very fast Usually. When that happens, we can only guess, it’s very likely not for a few months. On average, the downtrends on Wall Street last about a year, and the decline is more than 30%. If the bear sticks to the standards this time around, the markets will continue to bleed at least until spring and will see another 10 to 20 percent drop.

Indicators can drop another 20 percent
How far the Fed will raise interest rates is very important. It has been clear for some time that lowering inflation is a key priority, even at the cost of the economic crisis. Charles Evans, president of the Federal Reserve Bank of Chicago, declared that the Fed is united in the opinion that the key rate should be raised to 4.5 per cent by March and then left at that level for some time. Jamie Damon’s words echoed even more. JPMorgan Chase Bank expects the US economy to be in recession soon, but it probably won’t be as mild as some economists expect. Referring to the reasons mentioned at the beginning of this article, he said:These are serious problems that are likely to push the United States and the entire world into a recession within six or nine months. It is difficult to predict how dangerous it will be, because much will depend on the war in Ukraine.Dimon added that the S&P 500 could fall another 20 percent.