Friday, June 14, 2024

Panic on Wall Street after the fall of the Nasdaq code


Following the sharp fall in the Nasdaq index, Wall Street saw a wave of panic this week, prompting investors to wonder whether the markets will be satisfied with a revision process or whether they are on the brink of a prolonged fall with risks. For Economics and Joe Biden’s Administration, “Agence France-Presse.” .

The tech companies’ Nasdaq index fell more than 15 percent from its last record in mid-November, recording its worst month since October 2008 in light of the financial crisis.

According to the “Standard & Poor’s 500” index, which represents the overall US market, it is down 8.3 percent from its last peak at the beginning of the year.

Shares of “Netflix”, one of the most popular stocks on Wall Street, also fell sharply to -21.79 per cent on Friday, falling to about $ 400 a share after hitting $ 700 in November, raising major concerns. And started It raises concerns among small shareholders who rely on their retirement savings plan invested in the so-called “401K” stock market in the United States.

One Netizen complained: “Your 401K plan may be 40 percent lower than it was three months ago. I am 65 years old and I do not have time to rebuild myself. Thanks, Joe Biden.

Another wrote: “People are losing a lot of their 401K plans. The wallet determines the election, so the Democrats can expect a severe defeat.

Biden faces a tough legislative election in the middle of his presidency, during which time his popularity has plummeted.

What is alarming on Wall Street is that the US Federal Reserve has the potential to raise its interest rates in an attempt to keep inflation at a very high level for a generation.

See also  Racial discrimination cost the United States $ 2,300 billion

Interest rates, which have been at or near zero since the outbreak of the “Govt-19” epidemic, are expected to rise by almost one per cent this year.

Many believe the central bank has failed to tackle inflation, and may now tighten policy even tighter.

But the real question is, at what point does one need to know that a revision process will turn into a “bear market”, i.e. a market with a rough trend, as opposed to an upward “bull market”.

Commenting on the panic wave, Spartan Capital’s analyst Peter Cardillo said: “It is true that the market sees developments that do not follow any logic, except (the Nasdaq market), but he saw that season. Announcing the results of companies that are positive will change the trend.

“We are still far from (the bear market), but if we start to see a recession with higher interest rates, we will continue to sell, which may actually move us away from a revision,” said portfolio Gregory Vologin. Mischart Financial Services Manager for the bear market.

Recovering from the effects of the health crisis, the US economy is expected to continue to grow at a strong pace by 2022, but expectations have been lowered in this regard.

Will the stagnant financial market affect further growth? “It may slow the recovery, but it will not push us down,” said Sam Stowell of CFRA Investments.

“We have lowered our GDP growth forecast for 2022 from 4.6 per cent to 4.2 per cent, but this is in line with the period of inflation and expectations that the central bank will raise interest rates every quarter of this year,” the expert explained.

See also  Octave opens its headquarters in the Dubai International Financial Center

Others argue that a correction, if it does not last very long, is a good move in a market where stock prices are sometimes overvalued.

The share price and return ratio, which is considered one of the basic indicators for determining the value of shares, is 21.2 for companies in the “Standard & Poor’s 500” index, meaning those who wish to become shareholders pay a price. 21 times the value of the profit per share.

According to Sam Stowell, historical figures show that this percentage will drop to 19.7 at best, with rates between 1.75 percent and 2.25 percent in ten years. The expert said, “This is proportional to the 15 per cent decline in the index (standard and poor 500), which means we are in the middle of a revision.”

He went on to say, “History tells us that we can double to 30 per cent, if the rate drops to 16.2, its historical average under similar interest rates.”

But history is comforting, with experts pointing out that “after a correctional process, investors will return strongly, taking an average of four months to return to equilibrium.”

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

Share post:


More like this

Exhibition Stand Builders in Dubai

Dubai, a global hub for trade and commerce, is...

Unlocking the Power of Booking Engines in the Hospitality Industry

In an era dominated by technology, the hospitality industry...

Artificial Intelligence in Daily Work

Using AI has become a part of our everyday...

Fit and Fabulous in Dubai: Strategies for Succeeding in Weight Loss with a Busy Schedule

Achieving weight loss while maintaining a busy schedule in...