Wall Street falls fourth straight day as recession worries nag

After a brief hundred-point early morning rally, the Dow retreated steadily for the rest of the day, reaching a low over 400 down around 3 pm before a final hour rally that recovered over half of the day’s losses to close down 162.  The other indexes spent the entire day in retreat.  It’s a trend that started last Wednesday when Fed Chair Powell announced the expected rate hikes but the market was unhappy that the hikes are continuing despite the weakening economy. 

But the overheated economy needs to be weakened to bring down inflation which, until last week, was considered top priority by everyone but with these very mild signs of weakening have stoked the fears that more hikes will bring on recession. Investors are fleeing equities for the safety of fixed income which is now paying well.  The lack of any positive reports on Monday spurred more sell off. And the big question as put by today’s expert, “Is the Fed acting appropriately?”  Volume was a tad below average at about 11.1 billion. 

Mon  December 19, 2022  4:34 PM

Wall Street falls fourth straight day as recession worries nag

By Sinéad Carew and Sruthi Shankar

DJ: 32,920.46  -281.76        NAS: 10,705.41  -105.11        S&P: 3,852.36  -43.39      12/16

DJ: 32,757.54  -162.92        NAS: 10,546.03  -159.38        S&P: 3,817.66  -34.70      12/19

Dec 19 (Reuters) - Wall Street closed lower on Monday for a fourth straight session with Nasdaq leading declines as investors shied away from riskier bets, worried the Federal Reserve's tightening campaign could push the U.S. economy into a recession.  The three major U.S. stock indexes have been under pressure since Wednesday, when Fed Chair Jerome Powell took a hawkish tone while the central bank raised interest rates. Powell promised further rate increases even as data showed signs of a weakening economy.  The S&P 500 (.SPX), the Dow Jones industrials (.DJI) and the Nasdaq have sold off sharply for December and are on track for their biggest annual declines since the 2008 financial crisis.  While U.S. Treasury yields gained, investors ran from stocks, eyeing prospects of safer bets as they worried about the likelihood of a recession in 2023 according to Brian Overby, senior markets strategist at Ally.

"Investors are asking why do I want to take those risks going into 2023 with the Fed's stance still aggressive when I can get such a good yield on the fixed income market place," he said.  The lack of big earnings reports or economic data on Monday likely sharpened investors' focus on economic fears and interest rates, according to Melissa Brown, Global Head of Applied Research at Qontigo in New York.  "It's a knife edge between whether we're going to teeter into a recession or have a soft landing. Is the Fed acting appropriately?" said Brown who also noted that moves may be exaggerated as many investors take vacation around the end-of-year holidays.

The Dow Jones Industrial Average (.DJI) fell 162.92 points, or 0.49%, to 32,757.54, the S&P 500 (.SPX) lost 34.7 points, or 0.90%, to 3,817.66 and the Nasdaq Composite (.IXIC) dropped 159.38 points, or 1.49%, to 10,546.03.  The biggest decliners among S&P industry sectors were communications services (.SPLRCL), which fell 2.2%, consumer discretionary (.SPLRCD), down 1.7% and technology (.SPLRCT), which lost 1.4%. Energy (.SPNY) outperformed, closing up 0.13% as the sole industry out of 11 to manage a gain.

Market heavyweights such as Apple Inc (AAPL.O), Microsoft Corp (MSFT.O) and Amazon.com Inc (AMZN.O) created some of the biggest drags on the market.  Trading in Tesla Inc (TSLA.O) was volatile with the electric carmaker closing down 0.24% after falling as much as 2.8% during the session. This was after a Twitter poll that showed a majority of respondents want Tesla Chief Executive Elon Musk to step down as CEO of the social media platform.  Meta Platforms (META.O) shares finished down 4.1% after the European Commission said it could impose a fine of up to 10% of the tech conglomerate's annual global turnover if evidence showed an infringement of the EU's antitrust laws.  L3Harris Technologies Inc (LHX.N) lost 3.6% after the U.S. defense contractor said it would buy hypersonic engine manufacturer Aerojet Rocketdyne Holdings Inc (AJRD.N) for $4.7 billion. Aerojet added 1.3%.  Shares of casino operators Melco Resorts & Entertainment tumbled just under 8% and Wynn Resorts lost 5.2% while Las Vegas Sands Corp (LVS.N) fell 2.3% after Macau said on Friday that six casino firms will invest around $15 billion as part of new 10-year contracts they signed to operate in the world's biggest gambling hub.

Declining issues outnumbered advancing ones on the NYSE by a 2.80-to-1 ratio; on Nasdaq, a 2.63-to-1 ratio favored decliners.  The S&P 500 posted 5 new 52-week highs and 20 new lows; the Nasdaq Composite recorded 66 new highs and 456 new lows.

On U.S. exchanges 11.07 billion shares changed hands, compared with the 11.59 billion average for the last 20 trading days.