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https://www.cnbc.com/2022/05/05/stock-market-futures-open-to-close-news.html
The markets reacted to news of the FED proposed rate hike on Friday, ending the week with further losses.
After falling for six weeks, the DOW is poised to either recover or tank. The index is nearing its resistance level, and ended the week at 32,899.
We have seen the NASDAQ fall by more than 5% this week alone, and a big indicator that further correction is in store for the markets is seen as blue chips including AMZN, MSFT and GOOG fell along with more speculative small cap stocks. Expect to see more selling on high volume if we continue to see rising interest rates that make borrowing money for speculative projects costlier. Consumers have fewer dollars to buy non-essential items, and Under Armor fell along with Nike following Netflix. Austerity is a major threat to our consumer-heavy economy.
Essentially, we are looking at either a large drop in major indices or a relief rally. Major headwinds appear far off to propel the indices higher, but many issues remain in the economy that could push the index down, applying downward pressure. Interest rates, inflation, worldwide instability, food shortages and supply chain issues are all grinding on the indices, and small caps along with blue chips are suffering.
As speculative names and the NASDAQ fall, look for pockets of value. REITs are approaching value territory, and have historically outperformed the S&P 500 during times of inflation. I am accumulative cash in case the indices continue to drop, and am eyeing the Vanguard suite of ETFs to dollar-cost average into. What are your thoughts on the turbulent market conditions we find ourselves in?
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