GDP contraction ahead of the earnings season pushed Wall Street to move mixed. US GDP Annualized QoQ 1Q22 contracted -1.6% (Vs. Surv. -1.5%), as inventories of unsold goods increased, amid falling consumer spending. Meanwhile, Personal Consumption 1Q22, which contributed 70% of the economy, only grew +1.8% (Vs. Surv. +3.1%). Earning season of 2Q22 is a few weeks away, and the 130 companies in the S&P 500 have pre-announced with a negative/positive ratio of 1.7 or stronger than 1Q22, but weaker than last year. Investors’ biggest concern is margin pressure, along with rising raw material prices and supply-chain shocks.
Fears of a soft recession push the JCI below 7,000. Market optimism faded after consumer expectations of the Conf. Board Consumer Confidence in June fell to 98.7, the lowest level since February 2021. Recession fears increased following the Fed’s aggressive Hawkish stance against rising inflation. Meanwhile, this concern has made investors interested in safe haven instruments, as the yield on benchmark FR91 fell 5 bps, and FR90 even fell 24 bps a week. Closing the 2Q22 period, NHKSI Research projects the JCI to continue to move mixed, within a range of 6,900-7,050.
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