Just last week, traders and analysts were speaking of “capitulation”—a sign of panic, feverish selling, awful sentiment—to determine if the financial markets were crashing and nearing their bottom.
Yes, selling has been pretty frantic as the Nasdaq recently fell 12% in a week—declining in magnitudes rarely seen. Some even pointed at the small proportion (15%) of the S&P 500 stocks trading above their 50-day moving average. A trend that is meant to be indicative of a near-term bottom market.
Between the Russia-Ukraine crisis, rising commodity prices, fluctuating market sentiments, and questionable company valuations, it’s hard not to see the signs of a market contracting.
Companies that fail to prepare for the downturn could see themselves culled as an analysis by Bain noted that companies that stagnated following a recession didn’t have contingency plans or think through alternative scenarios.
Practically, this means companies need to control their burn rate to grow efficiently or manage their debts to mitigate the impact of declining revenues or higher interest payments.
But the markets continue to surprise.
This week, global stocks have pushed up as traders move back into riskier assets after the worst streak of weekly losses for equities since 2008.
According to JP Morgan, equity markets may have priced in