Correction Territory Beckons as Markets Stumble
On March 27, the U.S. stock markets witnessed a significant downturn. The Dow Jones Industrial Average plunged into correction territory, shedding 793 points (1.73%) to conclude at 45,166.64. Simultaneously, the S&P 500 dipped 1.67% to 6,368.85, hitting a seven-month low. The Nasdaq Composite wasn’t spared either, stumbling 2.15% to end at 20,948.36.
The massive selloff was primarily fueled by escalating energy prices. Brent crude surpassed the $110 per barrel mark, following incidents in the Strait of Hormuz. These occurrences intensified investors’ apprehensions regarding energy supply. The geopolitical unrest in the region has sparked concerns of prolonged energy cost inflation, which could potentially squeeze GDP growth in oil-dependent economies.
Markets are now factoring in a 52% chance of a Federal Reserve rate hike by the end of 2026. This marks the first instance of this probability crossing the 50% mark.
The broad market registered its fifth consecutive weekly drop. The S&P 500 has declined 6.8% for March, potentially its most significant monthly slide since December 2022. In light of these negative macro signals, Citigroup strategists have adjusted their U.S. small-cap allocation back to neutral and curtailed overall equity exposure.
Meanwhile, shares of identity verification company Clear Secure plummeted 11%. This drop came as the Transportation Security Administration secured funding to recommence paying officers. This development followed weeks of officers working without pay amidst a partial government shutdown.
Source: CNBC