On Friday, US stocks saw a significant decline, primarily driven by a technology sell-off. The Nasdaq closed more than 1% lower, retracting from its earlier all-time high. The downturn was exacerbated by a 5.5% drop in Nvidia shares.
The market lost momentum as the latest jobs data, released on Friday, surpassed expectations, revealing indications of an economic slowdown. February witnessed the addition of 275,000 new jobs in the US, surpassing the anticipated 200,000. However, revisions to previous months’ figures contributed to a rise in the unemployment rate to 3.9%, the highest level in two years. Additionally, wage growth decelerated during the month.
While these factors suggest the potential for rate cuts, they also acknowledge the possibility of the economy slowing down after a period of remarkable strength throughout the previous year.
The focus will now shift to the upcoming consumer price index report scheduled for next Tuesday. Inflation in January exceeded expectations at 3.1%.
Stock market conditions point to potential panic
According to one of the most pessimistic fund managers on Wall Street, the stock market appears to be entering the “perfect setup” for investor panic and an imminent market crash. Michael Gayed, a portfolio manager at Tidal Financial and author of The Lead-Lag Report, has raised concerns about the potential for a significant correction, citing various warning signs present in the market.
In an opinion piece for InvestorPlace, Gayed highlighted the increasing prices of gold, utility stocks, and long-term Treasury bonds-assets typically sought after for safety during market downturns.
He emphasized the unusual synchronicity in the movement of these traditionally defensive asset classes, suggesting that historically, such alignment has signaled a broader market shift. Gayed stressed the significance of this unified movement, especially occurring amidst a speculative trading bubble, indicating a potential impending disruption. He cautioned investors to stay vigilant.
Gayed has been sounding the alarm about a substantial stock market bubble forming for months, aligning with other bearish views on Wall Street that deem the hype around artificial intelligence as exaggerated and prone to a negative outcome.
Economist David Rosenberg warned earlier this year that stocks resemble the conditions preceding the dot-com and 2008 market crashes, attributing it to the dominance of mega-cap tech in the S&P 500.
While Gayed urged investors to prepare for a possible stock market crash, he refrained from providing an official price target for the year.
According to BI.
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