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ECB Governing Council member Winsch: The ECB will need to take action at some point to control the indirect effects of the energy crisis.The final reading of the Eurozone Composite PMI for March was 50.7, below the expected 50.5 and the previous reading of 50.5.The Eurozones final March services PMI was 50.2, below the expected 50.1 and the previous reading of 50.1.April 7th - Surveys show that German demand weakened due to the Middle East wars, causing a sudden loss of momentum in service sector business activity in March. The final S&P Global German Services PMI for March fell to 50.9 from 53.5 in February, the lowest level since September last year, slightly below the preliminary reading of 51.2. Phil Smith, Vice President of Market Intelligence at S&P Global, attributed the economic slowdown to rising gasoline prices and increased uncertainty. He added that despite significant cost increases, service providers failed to pass on higher price increases to customers due to weak demand. Smith stated, "The decline in new business inflows for the first time since September last year clearly demonstrates the direct impact of the Middle East wars on demand, while the significant drop in business expectations highlights the dampening effect of rising energy prices, supply chain disruptions, and generally high uncertainty on growth over the next year." Business expectations fell to a three-month low of 53.4 in March, below the long-term average of 56.7. The final Composite PMI also fell to 51.9 in March from 53.2 in February, a three-month low, entirely due to the slump in the service sector.ECB Governing Council member Winsch: If the Iranian crisis continues for an extended period, there may be multiple interest rate hikes.

S&P 500 (SPY) Dives Below The 4000 Level

Skylar Shaw

Aug 31, 2022 15:04


S&P 500 Continues to Face Serious Pressure

After the CB Consumer Confidence survey exceeded analyst estimates, the S&P 500 index continued to trend downward and dropped below the 4000 mark.


Good news is now terrible news for markets as robust consumer activity raises the possibility of a hefty rate rise at the next Fed meeting.


Another catalyst has to be properly monitored. The Fed will intensify its policy of quantitative tightening in September. The Fed will trim $35 billion in mortgage-backed securities and $60 billion in Treasury bonds off its balance sheet each month. The Fed will allow them to develop rather than selling them.


The Fed's balance sheet is already starting to shrink. The rate of this decline was moderate, however. Markets will have less liquidity starting in September, which might act as another negative driver for equities.


Recently, the S&P 500 was able to break through the 4000 mark, and it is now attempting to gather further downward momentum. It's interesting to note that the RSI is still in the moderate range, indicating that there is still plenty of opportunity for momentum to build should the proper catalysts materialize. Since the S&P 500 went from 4200 to 4000 in only three trading sessions, investors should prepare for severe volatility.

Energy Stocks Are Leading The Drop

A significant sell-off in energy equities has occurred today as WTI oil is down by around 6%. Leading energy companies Exxon Mobil, Chevron, Schlumberger, and others are down 3–4% today.


In the midst of a massive sell-off in the commodities markets, basic materials equities are also under significant pressure. For instance, Freeport-McMoRan, the largest producer of copper, is down nearly 6% today.


Also falling are tech stock prices. Today, all of the top tech companies, including Apple, Microsoft, and Alphabet, are losing momentum. Given the pressure on all market areas, there is nowhere to go.


However, the market does have some promising areas. Big Lots, a bargain retailer, is up more than 7% after an earnings report that was stronger than anticipated. Given that the price of Big Lots has been under pressure for some months, the response to the news is a normal relief rally since the company's performance was not as poor as anticipated.


The stock of Avid Technology has increased by almost 12% since it was included to the S&P 500 SmallCap 600 index. Being included to an index is always a good thing since it compels index funds to purchase the stock.


Traders are concerned that an aggressive Fed may impede economic development in the long run. Stocks will continue to see pressure if these concerns linger.

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