Spooky Halloween. Just a day after the S&P 500 entered correction territory, with a 10% drop from its July peak, markets bounced back on Monday. But the optimism might be short-lived, as traders are facing a host of unsettling factors this Halloween week.
Wall Street Jitters
Wall Street remains on edge with the S&P 500 down about 2.9% for October, heading for its third consecutive negative month since the start of the pandemic in 2020. The Dow and Nasdaq Composite are also feeling the pressure.
Fear and Greed Index
Which gauges market sentiment in the United States, still hovers in the “fear” zone, despite Monday’s rally.
What’s Giving the Markets the Chills
Several factors are contributing to market fears:
1. High Bond Yields
Bond market performance is suffering, thanks to surging yields. The 10-year Treasury yield is flirting with 5%, a level not seen since 2007 before the financial crisis. Yields are unlikely to return to pre-pandemic lows, which impacts consumer borrowing rates and business costs.
2. The Fed’s Next Move
The Federal Reserve is set to announce its interest rate decision soon. While inflation has stabilized, the labor market remains strong. Future rate hikes are on the table, creating uncertainty for investors.
3. Geopolitical Tensions
The Israel-Hamas conflict and ongoing tensions between Russia and Ukraine, as well as the US and China, are keeping investors on edge. These situations can indirectly affect markets through inflation and economic growth.
4. Tech Earnings Roulette
In a nutshell, market turbulence persists with high bond yields, Fed uncertainty, geopolitical tensions, and mixed tech earnings causing jitters. The ghosts of the past still haunt the markets this Halloween.