In the last two business days of operation, that is, this week, it seems that the global economy took a 360-degree turn and the markets, and on Wall Street, celebrate it with everything.
In a special way, the New York Stock Exchange has two days of strong gains, something that had not been seen for almost two years. Is the crisis over? Are we facing a new economic reality? Has the world managed to avoid recession and resume growth?
We have to measure what happens, because otherwise we run the risk of being adrift in an extremely volatile segment.
What happened in just 3 days?
Stock markets, especially those on the New York Stock Exchange, have posted spectacular gains in the two days of trading, we don’t know how far they could go, but anyone looking at the numbers for the most recent two days would think we are in another world .
In only two days of operation the index The Dow Jones accumulates a benefit of 5.53 percent, the S&P advances 5.72 percent and the Nasdaq rises 5.68 percentwe are on a two-day rally that looks like it may be extended by some favorable corporate news.
But essentially nothing has changed so far. The Fed said even this week through some of its officials that it will not abandon the task until it is completely done.
The expectations of higher increases in interest rates for the coming months remain valid, in addition to the fact that the expectation of a possible recession at some point last year has not ceased. Even the geopolitical scenario has not improved substantially, in addition to the war between Ukraine and Russia, which escalates one day and another, factors such as the concern generated by North Korea, or some signs of instability in the Arab world are added.
If everything stays the same, then what happened?
There are three tentative answers.
1. Investors went shopping with very punished prices.
It is probable that the most experienced investors, read mutual funds, simply went shopping, before the prices of the shares, especially of some triple A, as well as of important economic sectors. Although long-term pessimism about the economy remains, this is not the end of the world and this was demonstrated by those who “entered” the marketespecially when they looked at figures like the ones we stated in the third point.
2. If the US economy is bad, the world’s is worse.
The financial reporting season is upon us, although the “heavyweights” of the markets are yet to deliver their figures, that will happen with the passing of days.
Any way at all, investors probably consider that the largest and most relevant economy on the planet still has a lot to givedespite the recessive environment that surrounds it.
It is enough to turn to see other regions, to be convinced that, if the economy of the United States is bad, others are worse; in addition, its dependence on the United States is evident.
Europe is on the verge of recession, if not part of that continent is already experiencing this phenomenon. China itself is not experiencing its best moment, not to mention Latin America and other regions.
A) Yes, with three quarters of nightmare for the actions and before the evident punishment of the pricesThey gave the economy a vote
We have pointed out that the New York stock market accumulates three negative quarterly periods in the year, that means that the whole year has gone down.
Until Friday, September 30, the balance of 2022 in the main Wall Street indicators indicated the following:
The Dow Jones was already in the Bear Market zone with a cumulative drop of 20.94 percent; the S&P500 was in the same circumstance with a negative adjustment of 24.76 percent; For its part, the Nasdaq accumulated a real collapse of 32.4 percent.
As we stated in points 1 and 2, share prices were extremely punished, something that was taken advantage of by those who have measured the pulse of the market.
October will be key
For the markets, this month that begins will be key to determine if it manages to cut the negative streak or if it continues.
The start is promising, but nothing is guaranteed.
In the short term, several customs must be passed, such as the Russia-Ukraine war, geopolitical instability, the recovery of factors such as global logistics and production chains, the effects of the restrictive monetary policies of central banks.
On this last point, there is also some influence on the stock market rally of the last 48 hoursbecause investors consider the possibility that central banks are less restrictive in their monetary policies, something that sounds more like a pretext.
The fundamental conditions in the markets have not changed, but they show how unpredictable they are and how investors’ sentiments can change in a few hours, even if it is temporary.