European markets fall as global stocks retreat
European stocks retreated on Wednesday as global markets fell on economic concerns about inflation and the growth outlook.
The pan-European Stoxx 600 fell 1% in early trade, with banks shedding 2.4% to lead losses, while healthcare was the only sector in positive territory, down 0.8 %.
The negative trade in Europe comes after a torrid night for Asia-Pacific markets.
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US 10-year Treasury yield tops 4% for first time since 2010
CNBC Pro: The asset manager reveals what’s next for stocks and shares how the market is trading
Neil Veitch, chief investment officer at Edinburgh-based SVM Asset Management, says he expects the macro picture to remain “quite challenging” for the rest of the year.
Speaking on CNBC Pro Talks last week, Veitch named the key factors that could help the stock market become “more constructive” and shared his view on growth versus value.
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Earnings questions, potential recession mean more could be sold
The Dow and S&P 500 have fallen for six straight days, and many of them have seen the broad selloff typical of so-called “washout” days.
It can sometimes be a contrarian buy signal on Wall Street, but many investment professionals are skeptical that the selloff is over. One reason is that profit expectations for next year still show solid growth, which would be unlikely in a recession.
“We know that if we start to see a turnaround in 2-year yields … and if we start to see a turnaround in the dollar, that gives us the ability to bounce back from these extremely oversold conditions,” said Andrew Smith, head of investments. strategist at Delos Capital Advisors in Dallas. “But it’s hard for me to reconcile in my mind that the earnings story will be as good as we expect.”
Also, dramatic moves in the bond and currency markets mean that “something has broken,” and it may be smart to wait for that information to emerge, Smith said.
On the bright side, Smith pointed to a strong labor market and signs of continued travel spending as a sign that the US economy can avoid a major recession.
– Jesse Pound
Futures open higher
Stock futures rose slightly after trading began at 6 p.m. Dow futures rose more than 60 points at one point, though those gains have since pared.
Nasdaq 100 futures had the biggest early jump of three, suggesting tech may continue to outperform on Wednesday.
– Jesse Pound
The S&P 500 takes off the June low on Tuesday
While Tuesday’s closing levels showed relatively modest daily moves, the S&P 500 fell below its previous intraday low for the year during the session. This move was seen by many as confirmation that the summer stock recovery has failed.
The S&P 500 is now 24.3% off its all-time high, and the Dow is also in bearish territory, about 21.2%. The Nasdaq Composite, whose fall dates back to last November, is 33.2% below its peak.
The next key metric for investors in the coming days could come from the bond market, where the 10-year Treasury yield has risen to just below the 4% level.
– Jesse Pound, Christopher Hayes