What we’re reading (5/19)
“Stock Markets Finish Volatile Session Lower As S&P 500 Extends Decline” (Wall Street Journal). “U.S. stocks and bond yields fell, with the S&P 500 flirting with a bear market, in a continuing selloff driven by investor fears that the economy could be pitched into a recession. The major indexes dipped early in Thursday’s session, a day after tumbling 4%, before recovering ground. They ultimately finished lower, with all three on track for weekly losses of at least 2.9%. Concerns about consumer spending, which helped lift the market out of pandemic lows, have weighed on stocks and bond yields.”
“Markets Haven’t Acted Like This Since 1981 — And Here’s How That Played Out” (MarketWatch). “‘Just like today, the world’s central banks were obsessed with ‘breaking the back’ of inflation, which, like a monster in a horror movie, kept appearing to die before coming back with second and third winds,’ says Dhaval Joshi, chief strategist for BCA Research’s Counterpoint. ‘Just like today, the central banks were desperate to repair their badly damaged credibility in managing the economy.’”
“The Key 10-Year Treasury Yield Is Tumbling To Its Lowest Point In Weeks As Softening Economic Conditions Fuel Speculation Of A ‘Fed Pivot’ On Rates” (Insider). “On Thursday, data from the Philadelphia Fed showed a considerable slowdown in manufacturing activity in the mid-Atlantic region. The Philly Fed Index dropped by 15 points in May to 2.6, well below the Econoday consensus estimate of 16.1. Last week, consumer sentiment fell to its lowest since 2011, with the University of Michigan's May gauge driving down 9% to 59.1.”
“Goldman, JPMorgan Strategists See Recession Fears As Overblown” (Bloomberg). “Goldman Sachs Group Inc.’s David J. Kostin and JPMorgan Chase & Co.’s Marko Kolanovic say investor fears of imminent recession in the US are overblown -- leaving room for an equities recovery as the year progresses, in Kolanovic’s view. The benchmark S&P 500 has slumped 18% from its January record, approaching bear market territory.”
“Elon Musk’s Next Target” (DealBook). “Elon Musk is the latest prominent figure to push back on one of the hottest trends on Wall Street and in corporate America: E.S.G., the idea of valuing companies based on how they follow environmental, social and governance principles, rather than just chasing profits. Musk called E.S.G. a “scam” after S&P Global, the manager of a popular E.S.G. index, publicized that it had kicked Musk’s electric car company Tesla out of the index[.]”
