Market Insight – S&P500: Worst 100 trading days since 1970?

Market Insight – May 25th, 2022.  

• S&P500 - Worst 100 trading days since 1970? 
• FOMC minutes Today!
• Snap Inc. Stock dropped by 43% and dragged other tech stocks down.

S&P 500

Today is the 100^th trading day of 2022 a year filled with market turbulence, high volatility, and macro-economic pressures and risks. As per the market data, S&P 500 and Dow Jones are heading towards their worst first 100 trading days since 1970, and the Nasdaq. It’s the worst ever 100 days as Mega cap tech stocks continue to dominate the selloff. S&P 500 dropped by 0.81% to 3941.48. Dow Jones was marginally up by 0.15% to 31928.62. And Nasdaq melted down by 2.35% to 11624.45 in yesterday’s session. There are no signs of drying up of the selloff as tech-heavy Nasdaq was down yesterday by 270.83 points. The 2.35% is Nasdaq Composite’s lowest close since Nov 2020. Most retail investors who are overexposed to these growth stocks primarily the big Tech are driving the market losses.  

FOMC will release the minutes of the May policy meeting today Wednesday, May 25. Analysts are of the view that there is still a bit of room for a hawkish surprise in the FOMC’s May meeting minutes. Apparently, markets have already priced in two more 50 bps Fed Rates hikes in June and July. Rising interest rates, warnings of growth struggles, and a sense of excessive exposure should be the top concern for traders and investors alike in these market conditions. As the ‘buy the dip’ mentality would not hold back the selloff in such an environment.  

Chart analysis

The above S&P 500 chart shows that the index has dropped to touch 3810 points on Friday 20^th May the lowest. Since the beginning of the year briefly touched the bear Market territory. Then later rebounded to close at 3898 above the support level on the chart now at 3870 points. Monday was a bit better as stocks jumped up to 3973 by washing out all gains in yesterday’s action-packed session. The Pivot at 400 points is crucial as any move above it could mean that S&P500 is consolidating above the key support level at 3870 and under the 4000 marks. A test of 4120 will completely bring the control back into the hands of the Bulls.  

The sell-off in the Nasdaq composite was spearheaded by social media giant Snap Inc. (SNAP) as it logged its biggest one-day drop of 43% on record down from$22.32 to $12.79. Moreover, it dragged other tech stocks down lower. Snap stocks were sold off as CEO Evan Spiegel slashed the company’s growth forecast, citing rising inflation and interest rates with supply chain and labour disruptions. The social media giant is the latest to join the growing list of U.S. companies downgrading their growth forecasts over macro-economic pressures.  

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