Bank of America warns of new lows for S&P 500 as 'inflation shock ain't over'
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The U.S. stock market is suffering one of its worst weeks this year as pessimism about the economy grows, and losses are likely to accelerate in the coming months against a backdrop of scorching-hot inflation and an aggressive Federal Reserve.
That's according to Bank of America strategist Michael Hartnett, who warned in an analyst note this week that the "inflation shock ain't over," and that a subsequent earnings recession will precipitate further declines in the market.
The S&P 500 has already plunged more than 6% this week as concerns over sky-high inflation, rising interest rates and a darkening economic outlook continue to weigh on the market. The Dow Jones Industrial Average, meanwhile, is down more than 1,800 points, while the blue-chip heavy Nasdaq Composite has tumbled about 1.7%.
Hartnett said that past bear markets show an average peak-to-trough decline of about 37% for the S&P 500, the benchmark index, over 289 days. That would suggest the current bear market – which began in early June – will end in October with the gauge around 3,020 points. That would mark a nearly 22% decline from current levels.
INFLATION ROSE FASTER THAN EXPECTED IN AUGUST, KEEPING PRICES PAINFULLY HIGH