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Afternoon Note

Recession Fears

By Karina Hernandez, Senior Research Analyst
6/16/2022 1:07 PM

The market is sinking as the Street assesses the potential moves needed to bring down inflation would trigger a deeper downturn in economic activity. The slide is sending Nasdaq down around 4%, while the Dow Jones broke below 30k for the first time since late 2020.

Certainly, it hasn’t been normal for the Fed to increase rates by this much during prior market declines of 20% or lower. Inflation remains a much more serious problem today.

All eleven sectors are getting hammered this afternoon with Consumer Discretionary trading only ahead of Energy..

S&P 500 Index


Communication Services XLC


Consumer Discretionary XLY


Consumer Staples XLP


Energy XLE


Financials XLF


Health Care XLV


Industrials XLI


Materials XLB


Real Estate XLRE


Technology XLK


Utilities XLU


Energy remains very volatile with XLE back to March levels.


The 30-year yield took out its 2018 high, contradictory to one year ago when it hit its all-time low of 2.65%. This 2.66% spike in mortgage rates in the last 6 months is the largest increase seen since 1981.


As investors, the best we can do is wait for some of the immediate uncertainty to abate, be nimble and stay ready. Everyone should be sitting on larger-than-normal cash position, which still remains an ideal position for now.


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