[Worried about a bear trap in US stocks? Morgan Stanley says cash is the best asset right now] The US stock market closed sharply lower on Monday, extending last Friday’s decline, with all three major indexes falling more than 1%. Investors are concerned about further aggressive interest rate hikes by the Federal Reserve and a slowdown in the US economy. They sold off risky assets like US stocks and bought the US dollar.
The US stock market closed sharply lower on Monday, extending last Friday’s decline, with all three major indexes falling more than 1%. Specifically, the S&P 500 fell 2.1%, the Dow Jones Industrial Average dropped 1.9%, and the Nasdaq fell 2.6%.
Investors are concerned about further aggressive interest rate hikes by the Federal Reserve and a slowdown in the US economy. They sold off risky assets like US stocks and bought the US dollar.
Strategists at Glenmede warned in a report on Monday that a 'bear trap' could be lurking in this summer's sharp rebound in the stock market, which could bring painful losses to investors.
After rising nearly 17% from its mid-June low, the S&P 500 has been fluctuating at resistance levels, and recent focus has shifted to whether the summer rally will quickly fade, confirming a bear market rebound. The Glenmede team wrote in a client report on Monday: 'A 17% rebound from the June 16 low appears consistent with historical bear market rallies, which tend to rise more than 17.8% on average before reversing course and hitting new market lows.'
The strategist team noted: 'Although a recession has not yet been confirmed, the road ahead will largely depend...'