Q3 Recap (2022)
Quarter 3 ended on Friday, and markets are feeling the effects of major selloffs. Ever since the peaks of November 2021, the market has been on a steady decline. Looking to the major indices, the Dow Jones is -15.52% YoY, the Nasdaq -25.81%, and the S&P500 -16.62%.
Third quarter performance for the Dow Jones, the Nasdaq, and the S&P500 were consistent with yearly data. The Dow Jones is down 7.63%, the Nasdaq lost 4.96%, and the S&P500 shed 6.27%. The third quarter also confirmed that the US economy continues to be in a recession, with Q3 being the third in a row of negative GDP growth.
Inflation is still running rampant, averaging 8.4% during quarter three. In retaliation, the Fed has hiked interest rates to its highest since the 80s, at a range of 3–3.25%. It is likely that this will continue to increase throughout the remainder of the year, as inflation remains high despite the efforts of the Fed. Monitoring the CPI index will prove key to understanding the next decisions of the Fed, especially since August’s inflation was worse than expected.
With the Fed rate continuing to rise, and the prices of goods following, markets will likely continue to drop. Despite this, the job market has been extremely strong, which has helped the economy avoid a depression. Jobless claims hit a five month low in September.
Chip stocks have been one of the main focuses of selloffs this quarter, with stocks like AMD and NVDA taking the biggest hits. Advanced Micro Devices lost 14% and Nvidia is -16.42% this quarter. AMD and NVDA have had some of the worst performances year to date as well: AMD -57.83% and NVDA -59.70%. Part of the selloff was due to the halting of a large chip sale to China. Nvidia reported that the U.S. government is stopping some sales to China. AMD received similar notices by the US, which included the halting of sales for its MI100 unit. General demand for chips has remained high, with its increased use in vehicles and other technology. Demand has dropped however in other uses, such as cryptocurrency mining. The chip shortage continues to occur, with very high demand and fairly low supply.
Looking to quarter four, it is likely for a continuation in struggle for the markets. With inflation cooling off slightly from its peak of 9.1% in June, it is expected there will be another slight dip for September’s data. Further rate hikes and other fiscal policies will be enacted, and markets will continue to feel the effects.
All information in this article is for educational purposes only and is not to be considered financial advice. Do your own research and consult a financial advisor for advice.
