DAILY UPDATE: Recession and the Markets

Posted on August 25, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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There are certain types of stocks, bonds and mutual funds that perform better when the market is in decline. Seasoned investors tend to survive bear markets by focusing on the stocks of companies that make products necessary for daily life. Companies that often thrive in a recessionary environment are defensive stocks that provide products and services people simply cannot live without. Stocks included in this list are considered to be defensive by Wall Street analysts.

These type of stocks have performed -5.35% over the past year. By comparison, the S&P 500 is 7.13% over the same period. These types of stocks include: 30.00% of Consumer Cyclical stocks, 30.00% of Consumer Non-Cyclical stocks, 20.00% of Healthcare stocks, 10.00% of Technology stocks and 10.00% of Energy stocks.

Bear markets and recessions also tend to present themselves when market prices have been rising for a time; and investors are feeling irrationally exuberant. But, some markets have seen downturns in 2022 and 2023.

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Here is where the major benchmarks ended yesterday:

  • The S&P 500® Index fell 60 points (1.35%) to 4,376.31; the Dow Jones Industrial Average (DJIA) fell 374 points (1.08%) to 34,099.42; the NASDAQ Composite fell 257 points (1.87%) to 13,463.97.
  • The 10-year Treasury note yield (TNX) rose 4 basis points to 4.236%.
  • CBOE’s Volatility Index (VIX) rose roughly 1 point to 17.08.

Consumer discretionary was the weakest sector Thursday, as heavyweight constituents Amazon (AMZN) and Tesla (TSLA) both slid around 2.5%, with communication services and tech right behind. No sector was higher for the day.

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DAILY UPDATE: Dow and Fed Up but Markets Down

Posted on July 27, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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The Federal Reserve raised its benchmark interest rate another 0.25% on Wednesday, reviving its inflation fight despite a significant cooldown of price increases in recent months. The rate hike brought the Fed’s benchmark interest rate to a 22-year high of between 5.25% and 5.5%. Inflation has fallen significantly from a peak last summer, but remains at a level one percentage point higher than the Federal Reserve’s target of 2%.

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The Dow on Wednesday rose for a 13th straight day, matching its longest winning streak since 1987. If it closes higher today, it would be a streak not seen since 1897 — about a year after the benchmark was created — when the Dow advanced for 14 sessions in a row. During this latest run, the Dow has outperformed, gaining 5%. That momentum hasn’t been seen in the broader S&P 500 and NASDAQ Composite indexes, however. Both are up just 3% since the Dow’s streak began. The S&P 500 has fallen twice in that time, while the NASDAQ has posted three losing sessions

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Here is where the major benchmarks ended for the day:

  • The S&P 500 Index was down 0.02% at 4,566.75; the Dow Jones Industrial Average (DJIA) was up about 82 points (0.23%) at 35,520.12; the NASDAQ Composite was down 17 points (0.12%) at 14,127.28.
  • The 10-year Treasury note yield (TNX) edged down to 3.867%.
  • CBOE’s Volatility Index (VIX) dropped 5 points to at 13.32.

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DAILY UPDATE: Summer Speaks, Powell Suggests and Gensler Escalates as the Markets Rise

Posted on June 12, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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The US economy remains “very, very hot,” though not as much as it was six to 12 months ago, said former Treasury Secretary Lawrence Summers. “The United States is, today, an underlying 4.5-5% inflation country,” Summers said, speaking via video link at the start of the two-day Caixin Asia New Vision Forum in Singapore. At the same time, soft landings “represent the triumph of hope over experience,” and commercial real estate is one area where there are likely to be “pockets of distress,” said Professor Summers of Harvard University.

At its meeting this week, the Federal Reserve is expected to do something it hasn’t done in the last 15 months: not raise interest rates. Chair Jerome Powell suggested it might be time to take a breather as a series of rate hikes filters through the economy.

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Last week, the S&P 500 reached its fourth consecutive winning week and the NASDAQ seventh as investors find fewer things to be worried about. In a sign of that cautious optimism, Goldman Sachs slashed its probability of a recession in the next year from 35% to 25%.

Crypto: SEC Chair Gary Gensler dramatically escalated his war on crypto-currency last week, and prices took a big hit. Four of the 10 most valuable cryptocurrencies fell by at least 15%, per CoinMarketCap.

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