Another market selloff sees the S&P 500 post its worst day since June 2020

[MongiIG]

Target has joined the long list of retailers showing decreasing profit margins on the back of increasing input costs, which factored in to already weakening sentiment in equity markets.

 

 

Daniela Sabin Hathorn | Presenter and Analyst, London | Publication date: Thursday 19 May 2022 

The S&P 500 posted its worst session since June 2020 with the tech sector taking the brunt of the losses, while the Nasdaq shed another 4% on Wednesday.

Wall Street close

Let's take a look now at the Wall Street close in yesterday's session - really negative sentiment they're pricing in for the markets as you can see.

The Dow Jones Industrial Average down about 3.57%, shedding over 1160 points throughout the session. The S&P 500 had its worst day since June 2020, down just above 4% there. And the Nasdaq once again taking the heavy brunt of the losses, down about 4.73% throughout the session.

Technical analysis

Let's take a look now at some charts of this early US trade, because the negativity started yesterday before the opening bell.

We did have earnings from US retailer Target coming out throughout the morning. And like Walmart, the day before, Target announced that sales were up, but profits were down thanks to increasing costs and those tightening margins that we have seen in the markets.

Now, it was quite a negative sentiment, but it is a bit of a correction of what we've seen throughout the pandemic. We've seen a lot of evaluation in a lot of these shares, especially tech shares, throughout the pandemic and it's kind of a situation where we've seen that decline and getting to more sustainable levels.

As you can see here, the S&P 500 now really undoing those gains that we've seen steadily over the last week heading towards that low that we saw on Thursday last week when we saw that momentum turning. And it seems to me that every time we see a steady increase there, we see those daily gains building to the upside, we then see a day of big reversal, those sellers piling into the market as soon as we see some negative sentiment.

It looks like those sellers are really watching out for any attempt to jump into the market, looking to sell the top, and that seems to be what happened in yesterday's session once again.

So it does seem that we are stuck in this sellers market, this bear market, where any attempted recovery is met with some fierce resistance from sellers. And it only takes one day of heavy selling to undo those steady gains that we've seen throughout the week. So more negative sentiment likely to come here.

Nasdaq 100

Let's quickly look at the Nasdaq to see how that is performing.

Similar scenario here, those daily gains were mounting there, not quite managing to see those higher highs on the upside. So it was showing a little bit of reluctance from those sellers to give in some further space.

Once again, we saw that intense selling, pretty much undoing the gains for the week, heading around the low of Thursday last week.

 

 

[MongiIG]

S&P 500, Nasdaq 100 Latest – Bear Market Slump Continues.

May 19, 2022 |  DailyFX
Nick Cawley, Strategist

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• Fresh multi-month lows look increasingly likely.