Wall St collapses as investors worry about rate hikes and recession

Register now for FREE unlimited access to Reuters.com

  • All three major indices set for sharp weekly losses
  • Costco Drops After Falling Quarterly Gross Margins
  • Energy stocks plunge as US crude prices fall

23 Sept. (Reuters) – Wall Street’s major indices all collapsed to close well on Friday, as troubled investors continued to reposition on fears that the US Federal Reserve’s aggressive interest rate policy will help plunge the US economy into recession.

The Dow (.DJI) narrowly avoided finishing more than 20% lower than its all-time record of 36,799.64 points on Jan. 4, meaning the blue-chip index failed to hit a bear market label, according to a commonly used definition.

The S&P 500 (.SPX) and the Nasdaq (.IXIC) are already in a bear market. read more

Register now for FREE unlimited access to Reuters.com

After making strong gains in the past two years, Wall Street was rocked in 2022 by concerns about a host of issues, including the conflict in Ukraine, the energy crisis in Europe, the flare-ups of COVID-19 in China and the tightening of the financial system. conditions around the world.

Half a dozen central banks, including in the United States, Britain, Sweden, Switzerland and Norway, hiked interest rates this week to fight inflation, but it was the signal from the Fed that it expects high U.S. interest rates to 2023 will last, overtaking the markets . read more

“There were some optimists who said inflation could be brought under control, but the Fed effectively told them to sit down and shut up,” said David Russell, VP of Market Intelligence at TradeStation Group.

“The Fed is trying to take the bandage off and try to quell inflation while the job market is still strong.”

The bleak outlook of a handful of companies has also contributed to the woes in a seasonally weak period for the markets. After FedEx Corp (FDX.N) retracted its earnings forecast last week, it outlined cost savings of up to $2.7 billion on Thursday after falling demand hammered first-quarter profits. read more

The delivery giant’s stock slumped in Friday trading.

The S&P 500’s estimated earnings growth for the third quarter is 4.6% lower than last week’s 5%, according to data from Refinitiv.

Goldman Sachs lowered its year-end target for the benchmark S&P 500 Index (.SPX) by about 16% to 3,600 points. read more

“We’re having everyone reassess just how far the Fed will go, and that’s troubling for the economy,” said Ed Moya, senior market analyst at OANDA.

“It’s going to be the baseline scenario that this economy will have a hard landing, and that’s a terrible environment for US equities.”

According to preliminary data, the S&P 500 (.SPX) lost 62.49 points, or 1.69%, to finish at 3,694.32 points, while the Nasdaq Composite (.IXIC) lost 193.70 points, or 1.75%. lost to 10,873.10. The Dow Jones Industrial Average (.DJI) fell 473.55 points, or 1.57%, to 29,603.13.

All three indices also posted sharp weekly losses.

All 11 major S&P sectors fell, led by a decline in energy stocks (.SPNY). Oil and gas-related stocks were ravaged by the decline in crude oil prices, which fell in response to demand concerns in a recessionary environment and the strong US dollar.

Oilfield services were especially affected, with Halliburton Co (HAL.N), Schlumberger (SLB.N) and Helmerich and Payne Inc (HP.N) collapsing.

Price-sensitive technology and growth stocks fell with Alphabet Inc (GOOGL.O), Apple Inc (AAPL.O), Amazon.com (AMZN.O), Microsoft Corp (MSFT.O) and Tesla Inc (TSLA.O) all falling.

Shares of Costco Wholesale Corp (COST.O) fell after the big-box retailer reported a decline in profit margins in the fourth quarter. read more

The CBOE Volatility Index (.VIX), also known as the Wall Street fear meter, rose to its three-month high.

Register now for FREE unlimited access to Reuters.com

Reporting by Ankika Biswas and Devik Jain in Bengaluru and David French in New York; Editing by Marguerita Choy

Our Standards: The Thomson Reuters Trust Principles.

Leave a Comment