Wall Street limped to the finish line of its third losing week in a row.
The S&P 500 barely budged as it ended the week with a loss of more than 2 per cent, like other US indexes. It edged down less than 0.1 per cent. The Dow Jones added 0.1 per cent and the Nasdaq composite slipped 0.2 per cent. The Australian sharemarket is set to start the week in the red, with futures pointing to a loss of 23 points or 0.3 per cent, at the open.
The narrative in the stock market may be poised to flip from “buy the dip” during the first half of the year, when traders saw moments of weakness as opportunities to buy low, to “sell the rip” in the second half of the year, according to Bank of America investment strategist Michael Hartnett.
The Fed last month hiked the overnight interest rate it controls to the highest level since 2002, as it tries to smother high inflation. High rates work by slowing the economy bluntly and hurting prices for investments. The next big event for markets could be Fed Chair Jerome Powell’s speech late next week at an event at Jackson Hole, Wyoming.Besides making borrowing more expensive for everyone from homebuyers to multinational corporations, higher yields make the stock market look more expensive unless companies suddenly earn much more in profits. And while companies have reported better earnings for the spring than feared, it hasn’t been enough to stop the market’s slide.
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