THE ANALYSTS: 2022, the year of extreme volatility
CEO of Profit Jumpstarter, Keisha Bailey says 2022 will definitely be remembered as a year of extreme volatility on the stock markets.
Speaking on Taking Stock with Kalilah Reynolds, Bailey said the simultaneous world events such as the Russia/Ukraine war, the lingering effects of the COVID-19 pandemic, high interest rates and raging inflation have all contributed to immense volatility in the markets.
She said that the fluctuating nature of the markets is likely to continue as investors seek any semblance of good news.
“2022 has been an extreme year of volatility, it goes down in the record books as extreme,” she said.
She pointed to exchanges in the United States, which experienced a short rally last week with the Dow Jones gaining over 800 points, before falling again this week. The S&P 500 and Nasdaq indices fell into bear market territory earlier this month.
Bear markets are defined as sustained periods of downward trending stock prices, often triggered by a 20 percent decline from its most recent high.
From January to June 30, the S&P 500 is down 21 percent, the Nasdaq is down 30 percent, and the Dow Jones has dropped almost 16 percent.
Bailey said last week’s rally was investors’ reaction to a report that consumers believe inflation will eventually come down.
“What happened last week is that the Fed [US Federal Reserve] hiked interest rates 75 basis points and then the US consumer sentiment came out and that had one line of positive information,” she explained.
According to the report, US consumers believe that over the long term, inflation will fall to five percent.
Bailey said that given the current environment, it is not unusual for investors to cling to pieces of positive information. However, she said that as the news wore off, stocks fell again.
“The backdrop is still negative, we still have high inflation, we are still struggling with oil prices being higher, still struggling with interest rates going up across the entire world and the Russia/Ukraine war looks like it’s not going anywhere,” she said.
Bailey said that the volatility in the market will continue as investors react in real time to various bits of news.
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