On the one hand, the European financial sector is facing erratic profitability crisis, while; at the same time, the U.S. stocks are dropping at a rapid pace, as well. Global growth is being highly impacted by the ever – increasing dropping market shares and expensive monetary policies imposed by banks. Signs of stress can be seen in all major nations and future of the financial sector seems unpredictable and uncertain.
Due to numerous factors, even the U.S. Federal Reserve has been slightly secretive about their decisions. No one can be absolutely certain anymore regarding the future of rates. The situation has further worsened, especially taken into account the sudden drop of 2.6 percent in S&P financial index. This is undoubtedly the worst performing year as far as S&P sectors are concerned.
Investors are adapting to a laid – back kind of an attitude. This is as a result of the increasingly uncertain monetary policies. This subsequently is leading to question of whether the next big recession is in order to follow.
“I think that’s what financials are reflecting – that their net interest margins are going to be further compressed under collapsing bond yields,” said Mark Luschini, Chief Investment Strategist at Janney Montgomery Scott in Philadelphia.
Stocks of leading internet forums such as Facebook and Amazon had been marked as a form of strength in the previous year. In fact, fund managers have even said that last year’s gains, especially of the internet stocks such as Facebook have resulted in an increase of thirty – seven percent. Netflix can also be soaring with a total of 144 percent. This has naturally led people to choose internet shares as their first preference. However, their shares also face slight drops of 4.2 percent and 2.8 percent, respectively.
However, Chesapeake Energy faced a downfall of 33.3 percent at $2.04. They are hammered to such an extent that they are forced to opt for an alternative restructuring option with the help of their existing adviser, Kirkland & Ellis.
At the same time, the Dow Jones closed down at 177.92 points alongside the S&P 500 that lost 26.62 points. Nasdaq Composite too further dropped 79.39 points.
Fluctuating oil prices are also to a certain extent, adding tension to the already existing barriers that lay toward achieving a global growth in terms of finance and economy.
The technology sector is not spared either. Tech Company, Cognizant resulted in a drop of 7.7 percent to 54.05 dollars. The IT services also issue a weak sales forecast.
According to Thomson Reuters data, “Approximately 10.6 billion shares changed hands on U.S. exchanges, above the 9.4 billion daily average for the past 20 trading days.”
Declining issues outnumbered advancing ones on the NYSE by 2,484 to 618, for a 4.02-to-1 ratio on the downside; on the Nasdaq, 2,029 issues fell and 804 advanced for a 2.52-to-1 ratio favoring decliners. The S&P 500 posted 7 new 52-week highs and 97 new lows; the Nasdaq recorded 4 new highs and 495 new lows.