What the rising probability of a ‘growth scare’ means for the stock market, according to Citigroup

A “mild recession in 2023” could lead to a drop of about 20% for the S&P 500 index from its late March high of around 4,600, analysts at Citigroup said in a research report Monday. Under “a more severe, macro growth scare,” the index could see a drawdown of around 30% as the Federal Reserve continues to tighten its monetary policy in an already weakening economy in order to stave off persistently high inflation, the report shows.

The S&P 500 SPX, -0.02% was edging lower Monday afternoon to around 4,385, as companies’ earnings season for the first quarter moves into full swing this week. So far this year, the U.S. stock benchmark has dropped around 8%, FactSet data show. Traditionally defensive sectors, such as utilities, SP500EW.55, -0.30% consumer staples, real estate, communication services and health care SP500EW.35, -1.30%, become attractive to investors who are worried about a recession as their earnings are “less sensitive to economic activity,” according to the report.

Amid concerns over rising interest rates, growth stocks RLG, -0.14% have been lagging value stocks RLV, -0.12% this year by a wide margin, according to FactSet data. The last time yields on the 2-year and 10-year Treasury notes had inverted was in 2019, according to Dow Jones Market Data. An inversion of that portion of the Treasury market yield curve historically has preceded a recession, though typically a year or more prior to an economic contraction.

Boy, Republicans are lucky they lost that election.....................

We might not have a country by then

Not even going back to pre covid levels lmao

30% haha

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