BlackRock does not buy the fall as volatility rises in the stock market

BlackRock, the world’s largest asset manager, is not entering the downtrend to buy the fall, as the S&P 500 trades in a dominant market on Monday and worries about rising inflation and slowing growth in the US are growing.

“We are not buying the stock fall because valuations have not really improved,” BlackRock strategy analysts said in a note Monday. “There is a risk of the Fed tightening too much and the pressure on profit margins is increasing.”

Stock market volatility is growing as fears grow that the Federal Reserve may become more aggressive in its two-day policy meeting starting Tuesday as the central bank aims to control rising inflation through monetary tightening. Some investors worry that higher-than-expected inflation in May could push the Fed to become more aggressive in an already slowing US economy, potentially causing a recession.

I see: Economists say Fed will stay at 50 basis points this week, Powell will open the door to more aggressive action later

The Wall Street “fear meter”, the Cboe, VIX, volatility index,
+ 22.59%
has jumped to 34 on Monday, from just under 28 on Friday, according to FactSet data, at the last check. This is above the VIX 200-day moving average of about 23 and higher than the 50-day moving average of almost 27.

The S&P 500 SPX,
opened in bear-market on Monday and remained there late in the morning as it traded around 3,783, according to FactSet data, in the last audit. The S&P 500 will enter a bear market with a closing below 3,837.25 points, down 20% from its high record in early January.

Reading: The plunge in shares puts the S&P 500 on track to enter bear market: What investors need to know

S&P 500, fear meter

The US stock market fell last week, with the three key benchmarks recording their biggest losses since January. As stocks fell on Friday, Keith Lerner, co-investment director at Truist Advisory Services, told MarketWatch that he was concerned that the S&P 500 could see accelerated sales if the index breaks its May 20 low of 3,810.

The S&P 500 fell to 3,750.76 points on Monday morning, setting a new 52-week low for overnight trading, according to FactSet, in the last test. The index fell 2.9% in the late morning, while the Dow Jones Industrial Average DJIA,
fell 2% and heavy for Nasdaq Composite COMP technology,
fell 3.7%, FactSet data show.

The NASDAQ CBOE volatility index, or VXN, jumped to about 40 late Monday morning, from about 34 on Friday.

“We want to see VXN reach at least 37, if not 49, before we believe that US tech stocks have really been washed away to play for a recovery,” Nicholas Colas, co-founder of DataTrek Research, said in an email. on Monday.

Analysts, meanwhile, expect S&P 500 companies to increase profits by 10.5% this year, according to a report by BlackRock, which cites data from Refinitiv.

“This is very optimistic, in our view,” said BlackRock generals. “Stocks could fall further if marginal pressures increase.”

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