NASDAQ BREAKS SUPPORT -- THE DOW AND S&P 500 MAY BE NEXT -- HALFWAY TO RECESSION?

A BAD APRIL ENDS UNDER PRESSURE... Stocks fell sharply on Friday to end one of the weakest months in recent memory.   The Nasdaq market lost -13.2% to register its worst month since 2008.   The S&P 500 and Dow lost -8.8% and -4,9 % and experienced the weakest month in two years.   To make matters worse, Chart.1 shows the Nasdaq Composite Index falling below its February/March lows to the lowest level in more than a year.   Charts 2 and 3 show the SPX and Dow bearing down on their 2022 lows.   Small cap stocks also fell below their 2022 low to extend their current downtrend.   The Nasdaq was led lower by falling technology stocks which were one of the months biggest losers.   Rising bond yields continued to weigh on tech stocks with the 10-Year yield rising at the fastest pace in more than a decade.

SECTOR PERFORMANCE... Defensive consumer staples were the only sector to gain ground.    Energy, utilities, materials, real estate, and healthcare also held up relatively well.   The biggest sector losers were consumer discretionary (-16%), technology (-13%), financials (-12%), and industrials (-9%).   That combination shows investors selling more economically-sensitive stocks and favoring more defensive ones. Economic news also turned negative.

HALFWAY TO RECESSION?... A lot of recent messages herein have described the growing threat that the combination of high inflation and a more hawkish Fed could tip the economy into recession or, more likely, a period of stagflation not seen since the 1970s.   The standard definition of a recession is two successive quarters of negative GDP growth.      We got the first one this week with the report that first quarter GDP fell -1.4%.   One more quarter of negative growth would signal a recession.   Which suggests that we may already be halfway there.