Overly Pessimistic Market Conditions?

April – Worst Month Since 2008 Financial Crisis

As April ended, the Nasdaq logged its worst month since the 2008 financial crisis, while the S&P 500 logged its worst month since March of 2020 during the depths of the Covid pandemic. No company has been immune to the onslaught of the macroeconomic environment as many household names have seen their market capitalizations cut by 30%-60%, such as Meta (FB), Amazon (AMZN), Netflix (NFLX), Adobe (ADBE), Nvidia (NVDA) and PayPal (PYPL) to name a few. The Nasdaq and the S&P 500 finished out April at fresh lows for 2022, taking out their previous low in March, selling off 13.3% and 8.8% during April alone. The Dow Jones fared better, only selling off 4.9% for April.

There’s an array of macroeconomic headwinds that have underpinned this downturn. The Federal Reserve withdrawing monetary stimulus, continued supply chain challenges, rising rates throughout the remainder of 2022, chronic inflation, Covid-induced lockdowns in China, and the geopolitical crisis in Ukraine. As such, The Nasdaq and S&P 500 are off 23.9% and 14.3% from their all-time highs. These elements have potentially culminated in an overly pessimistic market, and great entry points are available for patient investors.

Google and Amazon Proxies

Both Amazon and Google closed out their largest monthly losses since the 2008 financial crisis. After earnings, Amazon dropped nearly 14%, leading to its largest one-day drop since 2006. This was on the heels of reporting a loss and issuing weak revenue guidance for the second quarter. Continue reading "Overly Pessimistic Market Conditions?"