Wall St posts third straight quarterly loss as inflation weighs, recession looms

The day actually started on a bright note with both the Dow and S&P up over 100 points around 11 a.m.  But then they came crashing down again to close out the last day of September and the last day of Q3 with another rout. The experts all said in August that September was historically a down month for the market and all hopes were that it would not be true this year since August had already been a pretty bad month.  And though September started with a bang, it’s been nothing but terrible since then and fulfilled the dire prophecy and then some, all on fears that the Fed will drive the economy into a terrible recession despite the fact that the data does not support any such fears. 

But the fact that the data has very wholesomely supported justification for the Fed to continue on its path to curb inflation has spooked everyone and drawn the market into its third consecutive declining quarter and the longest quarterly slump in seven years. Today’s PCE report did little to calm these fears for, while showing consumers continue to spend which has always been the economy chief’s support mechanism, prices continue to climb all but ensuring continued hawkish policy. Q3 forecasts are dire, having started at 11.1% and now down to 4.5 on aggregate. The Dow has lost 8,000 points YTD (22%) but what’s worse is that 5,000 of that (15%) was lost in just the last six weeks. Fingers crossed on Q3 earnings.  Volume was very high at 12.4 billion but much of that was due to quarter-end reallocations which means they’re highly exaggerated and therefore fictitious.  Monday will give us a clearer picture and hopefully the start of brighter times.

September 30, 2022  4:26 PM

Wall St posts third straight quarterly loss as inflation weighs, recession looms

By Stephen Culp

DJ: 29,225.61  -458.13        NAS: 10,737.51  -314.13        S&P: 3,640.47  -78.57      9/29

DJ: 28,725.51  -500.10        NAS: 10,575.62  -161.89        S&P: 3,585.62  -54.85      9/30

NEW YORK, Sept 30 (Reuters) - The S&P 500 closed the books on its steepest September decline in two decades on Friday, skidding across the finish line of a tumultuous quarter fraught with historically hot inflation, rising interest rates and recession fears.  All three major indexes veered to a sharply lower end, having quashed a brief rally early in the session.  The S&P and the Dow notched their third consecutive weekly declines, and all three indexes posted their second straight monthly losses.  In the first nine months of 2022, Wall Street suffered three quarterly declines in a row, the longest losing streak for the S&P and the Nasdaq since 2008 and the Dow's longest quarterly slump in seven years.

"It's another ugly day to end an ugly quarter in what’s looking like a very ugly year," said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. "Investors will look back and realize this was the year the Fed pulled a total 180 on their views on inflation and quickly turned incredibly hawkish."  The Federal Reserve has rattled markets by engaging in its most relentless series of interest rate hikes in decades in order to rein in stubbornly high inflation, which has many market participants eyeing key economic data for signs of a looming recession.  "The realization that the Fed is doing anything they can to combat 40-year-high inflation has investors worried they will push the economy over the edge and into recession," Detrick added.

The Commerce Department's personal consumption expenditures (PCE) report did little to assuage those fears, showing that while consumers continue to spend, the prices they are paying have accelerated, drifting further beyond the Fed's inflation target and all but ensuring the central bank's hawkish monetary policy will continue longer than investors had hoped.  Recession fears also echoed through dire warnings from Nike Inc (NKE.N) and cruise operator Carnival Corp (CCL.N), both citing inflation-related margin pressures. read more read more  Shares of the companies tanked by 12.8% and 23.3%, respectively.

The Dow Jones Industrial Average (.DJI) fell 500.1 points, or 1.71%, to 28,725.51; the S&P 500 (.SPX) lost 54.85 points, or 1.51%, to 3,585.62; and the Nasdaq Composite (.IXIC) dropped 161.89 points, or 1.51%, to 10,575.62.  Among the 11 major sectors of the S&P 500, real estate (.SPLRCR) was the sole gainer, while utilities (.SPLRCU) tech (.SPLRCT) suffered the largest percentage losses.

Apple Inc (AAPL.O), Microsoft Corp , Amazon.com and Nike weighed heaviest.

Corporate earnings reports for the quarter that ends with Friday's closing bell will begin landing in a few weeks, and analyst expectations are trending downward.  Analysts now see annual S&P 500 earnings growth of 4.5%, on aggregate, down from the 11.1% estimate when the quarter began.  Quarter-end fund reallocations and so-called "window dressing" is likely contributed to the session's volatility.

Declining issues outnumbered advancing ones on the NYSE by a 1.45-to-1 ratio; on Nasdaq, a 1.38-to-1 ratio favored decliners.  The S&P 500 posted no new 52-week highs and 93 new lows; the Nasdaq Composite recorded 27 new highs and 380 new lows.

Volume on U.S. exchanges was 12.44 billion shares, compared with the 11.45 billion average over the last 20 trading days.