S&P 500 Enters Correction Territory
The S&P 500, a major U.S. equities index, has dropped by just over 10% from its peak on July 31. This decline is seen as the first correction since the market reached its lowest point in the fourth quarter of 2022. The fears of a looming recession in the U.S. economy have led to this drop in the index. Similarly, the Dow Jones Industrial Average also ended the last week of October 2023 with a 1.7% decrease.
The S&P 500 has now corrected 10% from its July 31 peak. This is the first such correction since the market bottomed on October 12, 2022.
I’m surprised I see no screaming red headlines about this. It tells me it is not viewed as a big deal.
Then … the decline will continue… pic.twitter.com/R2HjEPHnJD
— Jim Bianco (@biancoresearch) October 27, 2023
Experts, including Jim Bianco of Bianco Research, agree that the S&P 500’s decline is a movement into correction territory and anticipate that it will continue until it becomes a significant issue. Bianco notes that this is the first correction since October 2022 and expresses surprise that it hasn’t received more attention. The decline in the index is attributed to poor earnings reports from companies like Ford and Chevron.
Rise of Safe Haven Assets
As investors seek safe assets, U.S. Treasuries have become increasingly attractive, causing a flight of capital from equities. Additionally, gold has experienced a rise in price, surpassing $2,000 per ounce for the first time since May. Interestingly, bitcoin has also seen a surge in performance, reaching its highest point in 2023 at over $35,000. This surge is linked to speculation that the SEC will approve spot bitcoin ETFs.
Some believe that both gold and bitcoin’s rise may be connected to fears of an impending recession in the U.S. economy, similar to the one experienced in 2008.
Hot Take: U.S. Equities Decline Amid Recession Fears
The recent decline in the S&P 500 and Dow Jones Industrial Average reflects growing concerns about a potential recession in the U.S. economy. Experts suggest that this drop marks the first correction since October 2022 and anticipate further declines until it becomes a significant issue. Meanwhile, investors are seeking refuge in safe assets like U.S. Treasuries, gold, and bitcoin, which have seen increases in value. The rise of these safe haven assets may be attributed to fears of an economic downturn similar to the 2008 recession.
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