On Friday, the yield on two-year Treasury bills rose to 3.06 percent, about a quarter of a point, while the yield on 10-year banknotes rose to 3.16 percent, approximately one tenth of a point.
Ultimately, for investors, the concern is how high prices and rising borrowing costs will affect consumer spending and corporate profits. Absorbing costs would affect the company’s profits, but passing them on could exacerbate the problems of the economy, said Yung-Yu Ma, BMO Wealth Management’s chief investment strategist in the United States.
“This is a very difficult time,” he said. Ma. Most companies are unlikely to maintain their profit margins in the face of rising energy costs, he said. Stock market analysts have been making profit projections what Mr. Ma called them “extraordinarily optimistic”, which he said are likely to be reviewed in the coming months and was ultimately reflected in lower stock prices.
This week, Target shares fell after lowering its profit forecast for the second time in three weeks as inflation and changes in customer habits affected its margins and left them with too much unsold inventory. , who said he would try to sell at a price. discount.
The S&P 500 has now fallen 18.7 percent from its Jan. 3 record, bringing it back to bear market territory, a 20 percent drop from a high, indicating a serious change in investor sentiment on Wall Street. The index fell briefly into bearish territory last month, before recovering to close just above this psychologically significant level.
Phil Orlando, chief stock strategist at Federated Hermes, an asset management firm, said in an interview that he expected the market to shrink further, perhaps 10 percent below current levels over the summer. . It favors so-called value stocks, such as those in the energy, financial and healthcare industries, over growth stocks, such as technology companies, because they have cheaper and more promising valuations in this environment.