To The Moon

The major U.S. stock indexes fell around 5% to 6% for the second week in a row, with the$S&P 500(.SPX)$ and the $NASDAQ(.IXIC)$ posting the 10th negative weekly results out of the past eleven.

Those two indexes retreated to levels last seen in late 2020; the Dow closed below 30,000 for the first time since January 2021.

As of last friday, the Indexes and Market weekly and YTD performances are as below: $DJIA(.DJI)$ ，$S&P/ASX 200(XJO.AU)$ ，$Straits Times Index(STI.SI)$.

A 3.9% sell-off on Monday pushed the S&P 500 into a bear market, as the index’s decline from a record high achieved on January 3, 2022, exceeded 20.0%. The NASDAQ has been in a bear market since March, while the Dow on Friday was just shy of a bear, as it was 18.7% below a record set in January.

The volatility of risky assets is likely to increase, gold is still expected to become a stabilizer to reduce portfolio volatility, and the decline in the market value of cryptocurrencies may continue.

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Macro FactorsTo Focus：

Policy Tightening: The 0.75% rate increase of FED approved on Wednesday marked the biggest hike since 1994, Chair Jerome Powell said that the Fed may slow the pace of rate increases in September if economic growth slows too much.

Economic Warnings: U.S. retail sales slipped 0.3% in May, falling for the first time in 5 months amid rising inflation. A separate report showed that industrial production grew at a slower pace last month while factory production fell for the first time in four months.

Buyback Boom:  U.S. companies continuing to spend record amounts to buy back their shares and distribute dividends. For companies in the S&P 500, the total shareholder return from first-quarter buybacks and dividends was a record $419 billion, up from the fourth quarter’s $404 billion.

Value vs. Growth: U.S. growth stock index fell 5.1% for the week compared with a 6.6% drop for a value index, briefly interrupting the value equity style’s wide year-to-date outperformance versus growth. Year to date, a growth index was down 30.3% compared with value’s 15.2% drop.

Sector Performances:

Same as previous week, all the sectors declined. But Energy, Basic Materials, Utilities sectors dropped the most.  Consumer Defensive, Healthcare, Communication Services Declined the smallest. 

The market is worried that the aggressive interest rate hike may lead to economic recession. Usually, under high inflation, the global bulk commodities must be crazy again, and a large amount of money will go into commodities to avoid risks, such as fertilizer, coal, grain, etc.

​Recommend to Read: Tiger Charts: What Sectors Can Survive in Rate Hiking Cycles

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​Top Gainners of S&P 500

But we still see some positive winners on last week.

$FedEx(FDX)$ ,$Boeing(BA)$ ,$Duke(DRE)$ ,$Vertex Pharmaceuticals(VRTX)$ ,$Biogen(BIIB)$ ,$Regeneron Pharmaceuticals(REGN)$ ,$Monster Beverage(MNST)$ ,$Incyte(INCY)$ ,$Oracle(ORCL)$ ,$Truist Financial Corp(TFC)$ .Looks more like transportation and Pharmace stocks.

Other Markets:

U.K. Rate Hike: With the United Kingdom’s inflation recently spiking to a 9.0% annual rate, the nation’s central bank raised its key interest rate by a 25bps—the 5th meeting in a row at which the Bank of England has lifted the rate that same amount.

Japan Rates Unchanged: Unlike other central banks, the Bank of Japan kept its policy of ultralow rates unchanged, citing the potential for economic decline if it pushed rates higher. The Japanese yen fell relative to the U.S. dollar.

Cryptocurrency Suffered Crash: the total market value has fallen below the $1trillion mark in the past week, as the liquidity ebb triggered a currency disaster, bitcoin lost $18000. According to a Goldman Sachs report, cryptocurrency accounts for only 0.3% of U.S. household assets, while stocks account for 33%, the recent decline in cryptocurrency will have a "very small drag" on total expenditure.

Crude Oil Big Decline:The price of U.S. crude oil$Light Crude Oil - main 2206(CLmain)$ decliend 8.29% weekly. Albert Edwards, strategist of Societe Generale, said that with the collapse of the Federal Reserve, the U.S. economy is in trouble. The sharp fall in crude oil prices last week may be the beginning of a similar commodity collapse.

Gold Closed Down Slightly : Gold$Gold - main 2206(GCmain)$ declined 1.78% to $1841.9 per ounce. Asset hedging demand may give the gold price more flexibility. At the same time, under inflation or stagflation, the performance of gold assets is also the best.

The week ahead: June 20-24

Monday

• Juneteenth holiday, U.S. financial markets closed

Tuesday

• Existing home sales, National Association of Realtors

Wednesday

• No major reports scheduled

Thursday

• Weekly unemployment claims, U.S. Department of Labor

Friday

• University of Michigan Index of Consumer Sentiment
• New home sales, U.S. Census Bureau 

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