On Friday, yields on 2-year government bonds rose about a quarter point to 3.06%, and yields on 10-year bonds rose about a tenth point to 3.16%.
The ultimate concern for investors is how high prices and rising borrowing costs will affect consumer spending and corporate profits. Yung-YuMa, chief investment strategist at BMO Wealth Management in the United States, said absorbing costs could hurt corporate profits, but passing them on could exacerbate economic problems. rice field.
“This is a very difficult moment,” Ma said. Most companies are unlikely to maintain a profit margin in the face of rising energy costs, he said.
Stock market analysts say Mr. Ma has made “very optimistic” profit forecasts, which will likely be revised in the coming months and eventually reflected in the decline in stock prices. He said.
This week, Target’s share price fell after lowering its second profit forecast in three weeks as inflation and changes in customer habits squeezed into margins and there was too much unsold inventory. discount.
The S & P 500 is back in the bear market territory, down 18.7% from its January 3rd record. This shows that there has been a serious change in Wall Street’s investor sentiment. The index temporarily fell into the bear territory last month, but then ended just above psychologically significant levels.
In an interview, Phil Orlando, chief equity strategist at asset management firm Federated Hermes, said the market is expected to fall further, perhaps 10% below current levels during the summer. He prefers so-called value stocks like the energy, finance and healthcare industries to growth stocks like tech companies. Because in this environment, there are cheaper ratings and more prospects.
