The Dow Jones Industrial Average closed in bear market territory, and S&P 500 hit a new low for the year in Monday's session. Art Hogan, chief market strategist at B. Reilly, joined Cheddar News to discuss.

The Dow Jones Industrial Average closed in bear market territory, and S&amp;P 500 hit a new low for the year in Monday's session. Art Hogan, chief market strategist at B. Reilly, joined Cheddar News to discuss. "I think what this market really needs is for the two things that are really driving the narrative: for Treasury yields to stop being parabolic to the upside to have effectively priced in where we think monetary policy is going," he said, "and the strength in the dollar really has to come off the boil."

Dow Falls into Bear Market as S&P Hits New Year Low

let's turn back to the major indexes rough day on Wall Street as you see a sea of red stocks closing near their session lows the S. And P. Ending at its lowest closing level of the year. And the dow officially ending in bear market territory down worse than 20% from its recent high joining the S. And P. And the NASDAQ. So joining me now is our resident market expert, Art Hogan, chief market strategist for the financial services platform B. Riley Art. It's great to see you. I wish we had better news. What is the outlook for stocks? Yeah. You know, it's so interesting that just started this by saying happy monday and that was the only good thing I heard all day really when you when you think about the psychology that's going on and I thought your recap was perfect. It's it's really just going back to Jackson Hole realization that this is a Fed that's going to be very aggressive with monetary policy sort of changing the game, moving the goalpost. Talking about terminal or where they stop raising rates now sits at about 5.5 or 5.6. Thereabouts, I'm sorry, 4.6 and and clearly that wasn't something the market priced. And so we lived through Jackson Hole went through a C. P. I M. P. P. I. That weren't better than expected. They were actually modestly worse than expected. So what we really need for this market to kind of get out of this quagmire this negative attitude of the real bearish narrative is to get inputs that dissuade us from, things are getting worse, not better. So unfortunately for C. P. I. P. P. I. That's two weeks away for a Fed meeting that's about 35 days away. But on thursday of this week we're gonna get the P. C. E. That's the that's the Feds favorite inflation indicator. That will give us a read on what the Fed actually likes to look at. That's an august read. So if we see some sequence improvement on a month over month basis, that might start changing the psychology again, it's you know, that that's thursday of this week. So it's a it's a little bit away. But another important data points tomorrow we get the michigan confidence numbers baked in. That is inflation expectations, looking at one year, three year, five year and 10 year and those have improved for three months in a row. If that continues to improve, that means inflation expectations aren't getting embedded. We're not starting to think this is going on forever. Both of those could be positive catalysts. But I think what this the market really needs is for the the two things that are really driving the narrative for Treasury yields to stop being parabolic to the upside to have effectively priced in where we think monetary policy is going and the strength in the dollar really has to come off the boil, that's been one of the most uh dangerous pieces of this puzzle if we continue to strengthen the dollar, obviously that's not good for our multinationals come early season and clearly it it makes it difficult for us to believe that inflation is actually going to recede anytime soon. So if we can either one of those, the parabolic move that we've seen in, in treasury yields and the dollar's ascent to at least plateau here for a little bit. I think that would give more of a risk on appetite to investors, which just hasn't been around for the last six weeks. So it is interesting. Are you're right, I mean, last week we saw the stock market closed lower for the fifth week in six weeks today, again ending at our 2020 too low for the S and P the dow, officially in bear market territory. The only thing that I'm noticing this time, that might be a little bit different is that we're not seeing these massive sell offs that we saw in March, that we saw in May, that we saw in june even that we saw in august right. I mean, some days we would see the stock market down 345% on the NASDAQ today. Of course, not a good day because of where we're at our lowest levels of the year, but these past few sessions, we still haven't seen the stock market completely fall out of bed. What sort of clue is that giving us as investors. Well, I will tell you this and I think that's a very astute observation. I think when you think about how much we've already baked in, we always like to think about how much damage is already being done. So you talked about the, you know, the dow bing and down 20% from its peak and the S and P and NASDAQ there, if you look at the average stock underneath the hood of those three large industries, you're gonna see the average stock is down a whole lot more. So we've already really tried to effectively bacon a lot of bad news into this marketplace. I think that what people have been looking for was were a couple of support levels gonna hold was the, was the june lows of 3600 and 36 66 gonna hold that didn't that closed? We need to see that close on a weekly basis below. They're not just on the one day basis to technically see if that remains supportive or not now becomes resistance. But the other thing everybody's been looking for is the volatility index or the vix to get above 30. And now we've seen that for a couple of days in a row that likely is a signal that we're closer to that capitulation than we were even, you know, three weeks ago. So to your point down five of the last six, it's been pretty violent today was less violent, lower volume. I think the inputs for this week are in front of us with both the U. Mish confidence on Tuesday and the pc report on thursday. But I think we're getting to that place where you know we're gonna we're going to satiate the needs of the sellers. People are gonna technically say we've priced it enough of the bad news that is in the here and now and if we start getting some sequential improvement and some of the inflation inputs I think that likely put the floor in the market. Alright. I wish we had more time. I am gonna end on a positive happy monday to you. I know you referenced it earlier. Yes. Happy monday. Even though the stock market feeling moody today. Art Hogan chief market strategist at B. Riley are. Thank you as always.