Daily Column – 30th April 2022

The US stock market just had its worst month since March 2020, when the pandemic caused the world to shut down. In April, the S&P lost 8.8%, the Dow lost 4.9%, and the Nasdaq lost 13.3%. This is the worst month for the Nasdaq since 2008.

In other words, the world isn’t shut down right now, and there isn’t a financial meltdown, either. They seem to think we’re in trouble. Because the market doesn’t grow as quickly as an air mattress after you fall asleep.

The Fed’s plan to raise interest rates in order to keep inflation down is the main thing that’s slowing down growth, though. As interest rates rise, high-tech companies become less appealing. This has been especially bad for them.

Cathie Wood’s ARK Innovation fund, which is one of the most well-known funds for stocks that could be in the future, had its worst month ever. It lost 26%.

In that fund: Zoom (–82%), Roku (–80%), and Coinbase (–67%) are all down from their high points.

A second thing to think about: Corporate giants are still hurt by supply chain bottlenecks. American companies that make products that are made in factories in China can’t make them because China has shut down cities at the first sign of Covid. This week, Apple said that it could lose up to $8 billion because of restrictions in China.

As if that wasn’t bad enough, the war in Ukraine has made things even more difficult for businesses in almost every industry. Just look at how Snapchat said its sales fell when advertisers paused their campaigns because of the war.

Big picture: The stock market plunge of March 2020 was followed by a huge rise in prices. A lot of experts say that this time, there won’t be a quick recovery. To keep up with inflation, the Fed will have to “raise until it hurts,” a Bank of America economist said.

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