Equity investors have long been hard hit by the market in April amid sharp fluctuations and losses not seen for decades.
The S&P 500 and Dow Jones Industrial Average showed the worst April since 1970 down 8.8% and 4.9% respectively. The Nasdaq Composites’ 13.2% drop was the largest since April 2000, followed by the Dow Jones Market Data Group.
“It was a disaster,”[ads1]; James Bianco, president of Bianco Research LLC, told FOX Business. “Markets are starting to realize that the Fed is going to be very aggressive,” he added. Bianco predicts that politicians will increase prices by 50 basis points at each meeting this year, including this week’s on Wednesday, with the possibility of an even larger increase at one of two of these meetings later this year.
WARREN BUFFETTS WARNING ABOUT INFLATION
Investors may be in for more downward volatility in May unless inflation begins to decline. “What ends this cycle is inflation, moderate inflation and it causes the Fed to withdraw,” Bianco added.
CONCERNED ABOUT INFLATION? WELLS FARGO SAYS SEE THIS DATA POINT
The consumer price index, which tracks several goods, including food, gas, rent and health services, jumped 8.5% in March from the previous year, the fastest pace since December 1981, when inflation reached 8.9%. The producer price index is even higher, rising 11.2%. The diesel component increased by 20.4%, driving most of the increase. New updates will come in mid-May.
ELON MUSK’S INFLATION DURATION WARNING
CLICK HERE TO READ MORE ABOUT FOX BUSINESS
Last week, the US economy fell surprisingly 1.4% during the first quarter, which raised new concerns about a recession.
In a recent research note entitled “Recalibrating our views”, the Bank of America’s Savita Subramanian, Equity & Quant Strategist described what has changed so far this year. “War, GDP cuts, food on steroids …” she said in detail. As a result, she trimmed the target for the S&P 500 at the end of the year to 4,500, which still means an annual increase of 8.9% from Friday’s closing price.
With the large averages falling sharply this year, Nasdaq, LPL Financial’s chief marketing strategist Ryan Detrick in particular, is of the opposite view.
“Everyone is bearish right now, we understand that, two years ago everyone was bearish too and see what happened. We’re not saying we’ll probably have that kind of rally, but there’s a lot of negativity and the economy is still strong, “Earnings drive things, and earnings are still pretty solid here, and we’ll go side with this opportunity,” he explained to FOX Business.