Wall Street ends down sharply; investors fret over economy

It seems the elation created by yesterday’s remarks from the Chicago Fed prez lasted exactly one day before the severe fears of the Fed launching us into a very deep recession reared its ugly head again and wiped out most of yesterday’s gains. This was despite another comment, this time from the Cleveland Fed prez, that there were no signs that our resilient economy was not efficiently absorbing the shock of the rate hikes. And though the comments served to validate yesterday’s, they also affirmed to investors that there was no reason for the Fed to let up on its plans at all, something they didn’t want to hear. 

With new unemployment claims at a five month low, the labor market remains resilient and this good news is bad news for more rate hikes. Treasury notes now pay considerably more than S&P dividends, which is also not what the market wants. The one-day numbers were dire with the S&P down 2.1%, the Nasdaq a whopping 2.8% and the Dow 1.5% down. Volume was heavy at 11.6 billion. 

Thu  September 29, 2022  4:25 PM

Wall Street ends down sharply; investors fret over economy

By Noel Randewich and Ankika Biswas

DJ: 29,683.74  +548.75       NAS: 11,051.64  +222.13        S&P: 3,719.04  +71.75     9/28

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

Sept 29 (Reuters) - Wall Street ended sharply lower on Thursday on worries that the Federal Reserve's aggressive fight against inflation could hobble the U.S. economy, and as investors fretted about a rout in global currency and debt markets.  With tech heavyweights Apple Inc (AAPL.O) and Nvidia Corp (NVDA.O) slumping more than 4%, the Nasdaq sank to near its lowest level of 2022, set in mid-June.  The S&P 500 (.SPX) touched lows last seen in November 2020. Down more than 8% in September, the benchmark is on track for its worst September since 2008.

A sell-off in U.S. Treasuries resumed as Fed officials gave no indication the U.S. central bank would moderate or change its plans to aggressively raise interest rates to bring down high inflation.  Cleveland Fed President Loretta Mester said she does not see distress in U.S. financial markets that would alter the central bank's campaign to lower inflation through rate hikes that have taken the Fed funds rate to a range of 3.0% to 3.25%. read more

Data showed the number of Americans filing new claims for unemployment benefits fell to a five-month low last week as the labor market remains resilient despite the Fed's aggressive interest rate hikes.  "Good news is bad news in that today's job number again reiterates that the Fed has a long way to go," said Phil Blancato, head of Ladenburg Thalmann Asset Management in New York. "The fear in the marketplace is that the Fed is going to push us into a very deep recession, which will cause an earnings recession, which is why the market is selling off."

The most traded stock in the S&P 500 was Tesla Inc (TSLA.O), with $20.8 billion worth of shares exchanged during the session. The shares declined 6.8%.

The yields on many Treasuries, which are considered virtually risk-free if held to maturity, now dwarf the S&P 500's dividend yield, which recently stood at about 1.8%, according to Refinitiv Datastream. read more

The S&P 500 dropped 2.11% to end the session at 3,640.47 points.  The Nasdaq declined 2.84% to 10,737.51 points, while the Dow Jones Industrial Average declined 1.54% to 29,225.61 points.

Volume on U.S. exchanges was relatively heavy, with 11.6 billion shares traded, compared with an average of 11.4 billion shares over the previous 20 sessions.

All 11 S&P 500 sector indexes declined, led lower by utilities (.SPLRCU), down 4.06%, followed by a 3.37% loss in consumer discretionary (.SPLRCD).  Declining stocks outnumbered rising ones within the S&P 500 (.AD.SPX) by an 11.6-to-1 ratio.

Meta Platforms (META.O) ended down 3.7% after Bloomberg reported the Facebook owner froze hiring and warned employees of more downsizing to come. read more  CarMax Inc (KMX.N) slumped nearly 25% after the used-car retailer missed expectations for second-quarter results, hurt by consumers cutting spending amid inflation, rising interest rates and higher car prices.  General Motors Co (GM.N) and Ford Motor Co (F.N) fell more than 5% each.  Airline carriers and cruise operators fell on canceled or delayed trips after Hurricane Ian hit Florida's Gulf Coast with catastrophic force. read more  American Airlines (AAL.O), United Airlines Holdings (UAL.O) and Delta Air Lines (DAL.N) each lost more than 2%.  Cruise ship operators Norwegian Cruise Line Holdings Ltd (NCLH.N) dropped 5.3% and Carnival Corp (CCL.N) fell 6.8%.

The S&P 500 posted no new highs and 106 new lows; the Nasdaq recorded 14 new highs and 518 new lows.