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It's been a vicious 6 months for stocks. Here's what the grim markets are signaling

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This has been the worst start to a year for stocks in more than half a century. Here's what the markets are signaling.

"When interest rates go up, it changes all the math," says Charles Bobrinskoy, vice chairman of Ariel Investments."It changes the math of buying a car, buying a house, buying a bond, and it changes the value of particularly tech stocks, whose earnings are far off in the future."

This time is no different. The S&P 500's worst stock performer to date is Netflix, which is down 70%. It's an incredible reversal for a company that The first signal came on January 5, when a readout of a Fed meeting that took place at the end of last year was released. Those minutes showed how Fed members saw rising inflation as a major risk to the economy and they would have to start raising rates sooner than expected.

Yung-Yu Ma, the chief investment strategist at BMO Wealth Management, says it has been a"very fast-moving environment, where inflation continued to surprise to the upside, and the Fed's own projections of how quickly it was going to raise interest rates ... kept surpassing expectations.

"Inflation is going to be higher for a longer period of time," says Gargi Chaudhuri, head of iShares investment strategy at BlackRock."Maybe not today's 8.6%, but still much higher than the pre-pandemic level."

 

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It's been a vicious 6 months for stocks. Here's what the grim markets are signalingAll that whipsawing on Wall Street reflects real nervousness among investors. They're worried the Fed may tip the U.S. economy into a recession. First it was risky names, now it's most stocks.
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