As the Fed aggressively raised interest rates for the third time in a row in September and November amid rising recessionary concerns and escalating inflation, equities took another dive. Questions about the influence of a slowing world economy on company earnings, which had remained better than many had anticipated, increased when FedEx, a global transportation company, issued an earnings caution.
On September 30, the final trading day of the quarter, the Morningstar US Market Index reached a new bear-market low as investors accepted further volatility and the possibility of an extended bear market rather than the V-shaped rallies that have previously followed recent downturns. By the third quarter’s end, stocks had fallen 4.6% during the previous three months and 24.9% in 2022. So are you looking for the best app to invest in US stocks from India? Keep reading to find out more.
The Strengthening Dollar
The U.S. dollar climbed to multi-decade highs versus key currencies due to the Fed’s rate hikes, which also substantially impacted the currency markets. This is the dollar’s best period in 20 years. Investors have gone towards U.S. currency in quest of yield and a place of refuge as U.S. interest rates are rising quickly, and they are concerned about a slowdown in the global economy. As a result, the dollar increased by 8.6% throughout the three months. In the meantime, the yen dropped by 15.2%, and the euro fell by 6.8% against the dollar.
According to Morningstar’s chief markets strategist David Sekera, strengthening the U.S. dollar would probably have hurt third-quarter earnings. Large international tech companies will experience difficulties because a significant portion of their sales is generated outside of the United States. That’s because as the dollar’s value increases, imported items made in the United States become more expensive.
US Stocks Have Priced In the Recession Risk More Than Other Asset Classes
According to Citigroup experts, U.S. stocks have priced in the most significant recession risk compared to other assets. Still, they warned that this was insufficient given the prospect of more losses during an “unusual” period for economies. As a result, the benchmark S&P 500 index has experienced a 22% year-to-date decline, placing it firmly in a bear market as risk-averse investors shrank their portfolios in response to concerns about increasing interest rates, record inflation and the lingering effects of supply chain problems throughout the world.
According to Refinitiv statistics, analysts now anticipate that S&P 500 businesses will only see a 2.8% gain in quarterly earnings compared to last year. This is a significant decrease from the 11.1% increase anticipated at the beginning of July. Although the S&P 500’s current pattern of significant upward rises mimics those seen in previous market bottoms, several stock market gauges that showed warnings for the year ahead seem to be more optimistic.
Should You Invest During a Recession?
Are you wondering how to invest in US stocks during a recession or whether you should at all? The question of whether or not the US economy is in a recession is still heavily disputed. However, by reporting a second consecutive quarter of negative GDP growth, the largest economy in the world technically entered such territory during the April–June period, according to the official definition.
As we enter the fourth quarter of the year, it is becoming evident that many of the world’s leading economies will have a difficult winter, with the eurozone on the prospect of following suit and a worsening economic prognosis strongly implying that things will deteriorate before they get better. Thus, when looking to invest in the financial markets, investors need to use caution.
The S&P 500 fell to a two-year low by late September due to recent stock market declines, which have been brutal. These downturns will invariably present a lot of chances for investors to buy inexpensive equities that have been oversold in a tense market environment. This can be achieved by investing in value equities, particularly dividend-paying ones. Even if a company’s stock price keeps dropping, it may continue paying dividends to investors, giving them a reliable source of income that can shield them from additional market bearishness.
In a recession, it makes sense to invest in defensive equities that are less susceptible to swings in the business cycle. As per Brian Katz, a chief investment officer of The Colony Group, who recently talked to Forbes Advisor, businesses that supply necessities like food, power, and shelter are typically non-cyclical and less subject to economic cycles. Given that people require water, power, and energy regardless of the state of the economy, the utility sector is a prominent defensive play in this regard.
Which are the Best Stock Apps to Invest in US Stock Markets?
Stockal could be considered the best app to invest in US stocks from India. It comes with various financial products, including stacks, ETFs, and stocks. Stockal provides its users with live chat, email and telephone customer support. The platform has extensive research tools. Professionally managed funds are available on its platform, which provides a variety of investing methods and styles to give your assets a competitive edge. The greatest global investment managers have developed these products through a thorough research process to meet various investment strategies, risk tolerances, and ambitions.
- TD Ameritrade
For new investors, this platform is excellent. It provides excellent instructional programming, no trade commissions, and a fantastic mobile app user interface. It includes several helpful tools, solid security, and reasonable pricing. It offers outstanding instructional tools, the Thinkorswim trade engine, and thorough stock market analysis. It features an exceptional customer service system and has no minimum deposit requirement.
- Interactive Brokers
Professional and experienced investors will benefit significantly from this simplified investing platform. It emphasizes broadening market access, lowering prices, and excellent trade performance. Traders can trade in bonds, futures, equities, options, currency, and other financial instruments using this platform. In addition, investors can participate in SRI using a service called Impact Dashboard (socially responsible investing). It offers international trading, cheap margin rates, low commission rates, and no transaction costs for mutual funds.
- Charles Schwab
It is one of the top trading platforms right now, suitable for both experienced and novice investors. It offers calculators, as well as tools for research and instruction. Millions of new consumers have joined due to the acquisition of TD Ameritrade. It includes excellent calculators, instructional materials, and stock research. In addition, it provides trustworthy screeners for mutual funds, equities, and ETFs. Customers of Charles Schwab can now access the Thinkorswim trade engine thanks to the acquisition with TD Ameritrade.
It is yet another well-known software devoted to offering the best trading and investing experiences for India’s stock markets and those worldwide. For aggressive traders searching for expert market data, extended trading hours, commission-free investments, and cryptocurrency trading, WeBull is an excellent option. In addition, the app will be a good fit for new active investors due to its user-friendly layout.
The Bottom Line
You may start by looking into the several options Stockal offers if you are looking for the best app to invest in US stocks from India. With Stockal, creating an account is simple, and there are no minimum balance requirements. You can purchase fractional shares on a secure site and receive top-notch analysis and research. Additionally, Stockal will swiftly provide you with holdings updates. If you want to find out how to invest in US stocks, you could head to the Stockal app and enjoy its user-friendly features to find out more in detail.