Here's why investors from Wall Street to Main Street are feeling glum.
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Phil Rosen
Aug 4, 2022, 17:14 IST
Traders work the floor of the New York Stock Exchange during morning trading on May 05, 2022 in New York City. Stocks opened lower this morning after closing high on Wednesday after the Federal Reserve announced an interest-rate hike by half a percentage point in an effort to further lower inflation.Michael M. Santiago/Getty
G'morning Opening Bell team. Phil Rosen here — this California sun has me feeling chipper!
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But that puts me in a rare company these days.
In this economy, bears abound and optimism is as hard to spot as a week without a crypto hack.
Today, I'm breaking down why everyday traders and institutional investors alike are feeling downbeat about the stock market.
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People look to this metric as a gauge of investor sentiment, and right now it signals that investors are bracing for a downturn.
"While the SSI does not catch every rally or decline in the stock market, the indicator has historically had some predictive capability with respect to subsequent 12-month S&P 500 total returns," BofA analysts said Wednesday.
But they also pointed out that a second signal — the Equity Risk Premium — shows markets are pricing in an 80% chance of a mild recession, and a 30% chance of a "full-blown" recession.
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And optimism only drops when data points confirm forecasts. BofA had earlier predicted a recession to hit before 2023, and these moves support that hypothesis.
2. US stock futures take a breather Thursday, following a strong rally in the previous session. Meanwhile, oil dropped to its lowest level in three weeks. Here are the latest market moves.
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3. On the docket: Tesla, Toyota Motor Corp., Square, all reporting. Plus, look out for the unemployment insurance weekly claims report, expected from the US Department of Labor this morning.
4. This batch of stocks is poised to stand out while recession fears make stock-picking historically difficult. David Kostin of Goldman Sachs pointed out which companies have the best shot at outperforming a market that's becoming increasingly difficult to navigate. Here is his list of 25 names.
6. Lumber prices are falling as the market realizes housing is "going back to normal." Lumber fell 5% yesterday, to hit a new 2022 low of $495 per thousand board feet. As one housing CEO put it: "The last couple years are going to be an outlier."
7. Solana is the latest target of a crypto hack, just days after almost $200 million was swindled in the Nomad bridge heist. In 2022, hackers have targeted blockchain bridges repeatedly and have netted nearly $1 billion. Here are the full details.
9. Wealthy international buyers poured nearly $60 billion into the US housing market over the last year. Foreign customers are showing confidence in American real estate with all-cash offers even as bearish analysts are calling for a potential crash — and these buyers aren't worried about a bidding war.
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