Insanely bad month: numbers like this haven't been seen in the stock market for two years
The S&P 500 lost 5.3% in January, while the technology-heavy Nasdaq lost as much as 9%. The last time the US saw such a decline was at the start of the coronavirus crisis. Prior to that, during the last financial crisis writes the Financial Times. And this despite the fact that yesterday's trading day led to a strong increase.
For investors, the selling mood was driven by several things at once. First, the Federal Reserve (Fed) came out of the trenches and announced that the time had come: to raise interest rates, the money supply would end. While there was talk of three rate hikes in the first year, Wall Street analysts suggest there could be up to seven rate hikes. Investors have a lot to think about.
At the same time, high inflation is squeezing the revenue base of many companies, and there is further uncertainty in the markets. While stock markets have mostly fallen, energy prices have risen to new highs and oil prices are up 15% in a month.
Professional investors believe that large fluctuations will remain with investors for a whole year.
“This will be the year we need a more flexible approach to asset allocation,” Wylie Tollett, head of client solutions at Franklin Tempelton, told the Financial Times.
More volatility in stocks can be a good thing: fast-acting investors and traders can profit this way. But the "buy and hold" strategy may have nervous times ahead.
At the same time, European markets as a whole weathered the fluctuations only slightly better. The Stoxx 600 lost 3.9% of its value. The Tallinn Stock Exchange lost 2% in a month.