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The Dow falls again and equities continue their miserable 2022

New York
CNN Business

The meltdown of the stock market in 2022 is not over yet. But at least investors do not seem to panic. The shares were mixed on Thursday, after Wednesday’s massive sale.

The Dow fell nearly 350 points, or 1.1%, in trading on the day. Blue chips have now fallen almost 15% this year.

The S&P 500, which is dangerously close to falling 20% ​​from the highest record it set on January 3 and entering a bear market, was down 0.8%. Technology-heavy Nasdaq, which is already in the territory of the bear market, declined slightly. Nasdaq has fallen 27% this year alone.

Prominent technology stocks were among the biggest losers in the market on Thursday after the Dow component Cisco (CSCO) reported sales that missed forecasts and also gave a weak outlook. Cisco (CSCO) fell 12% on the news.

Retail leaders Walmart (WMT) and Target (TGT), which have pulled down Wall Street this week due to disappointing prospects, were hit again on Thursday, and news continues to be bad for other retail stocks.

But Kohl’s (KSS) shares rose nearly 4% on Thursday in volatile trading, even though the struggling chain reported a huge loss on earnings and cut guidance.

The poor results from business leaders also cause the alarm bells to recede. Several experts are beginning to predict a decline later this year or early in 2023. The turmoil on Wall Street is palpable.

«What is the catalyst? What will make investors want to buy more and give them confidence in the market? I do not think there is anything right now, “said JJ Kinahan, marketing strategist at tastytrade.

VIX (VIX), a measure of Wall Street volatility, has nearly doubled this year. And the CNN Business Fear & Greed Index, which looks at VIX (VIX) and six other measures of market sentiment, are flashing signs of extreme fear.

“Investors should keep their seatbelts fastened. This period of volatility is unlikely to be over,” said Tom Galvin, chief investment officer at City National Rochdale.

“There is a long list of uncertainties,” Galvin added, citing the Federal Reserve’s interest rate policy and inflation, concerns about new Covid outbreaks in China and Russia’s invasion of Ukraine as lingering concerns.

Galvin said investors would do well to avoid speculative technology stocks and European stocks because of concerns about exorbitant valuations and a potential economic downturn. Instead, he recommends high-quality blue chip stocks that provide steady returns.

Investors may also be nervous about how the market turmoil is hurting large hedge funds and other institutional investment firms.

A prominent hedge fund, Melvin Capital, announced plans to close after investing in rising meme stocks such as GameStop (GME) in 2021 and buying travel shares at a bad time this year.

Traders have acquired risky technology stocks, bitcoin and other cryptocurrencies and other investments that could benefit from an economic recovery.

“There’s definitely more fear and nervousness,” said Dan Pipitone, CEO and co-founder of TradeZero. “Cryptocracy is also having an impact. It’s a wait and see approach. People are sitting on the sidelines waiting for clear guidance on where we are going.”

Instead, investors are now flocking to equities that are perceived as better hedging against, and in some cases benefiting from, inflation and rising interest rates.

Case in point? Oil stocks are big market winners this year. Chevron (CVX), up more than 40%, is the top Dow stock, and it is one of the four largest holdings in Warren Buffett’s Berkshire Hathaway (BRKB), hitting the market this year.

Berkshire is also a major investor in Occidental Petroleum (OXY), which has more than doubled this year and is the best performer in the S&P 500.

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