December 7, 2022

Raven Tribune

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Stock futures drop after Nasdaq Composite closes at two-year low

Stock futures drop after Nasdaq Composite closes at two-year low

US stock futures were flat on Tuesday after the Nasdaq Composite closed at its lowest level in two years during the regular session.

Dow Jones Industrial Average futures fell 54 points, or 0.18%, rebounding from a slump that sent the index down nearly 200 points in pre-market trading. S&P 500 futures slipped 0.34% while Nasdaq 100 futures fell 0.43%.

Stocks closed lower on Monday, with the Nasdaq Composite down 1% after semiconductor stocks fell. The Dow Jones Industrial Average lost nearly 94 points, or 0.3%, while the S&P 500 lost nearly 0.8%.

Bond prices also fell. The yield on the 10-year US Treasury rose by about five basis points to 3.937% after approaching the key level of 4% overnight. Bond yields are inverse with prices, and the basis point is one hundredth of one percent.

The moves came as investors weighed comments by Jamie Dimon, CEO of JPMorgan, who warned that the US could fall into a recession in the next “six to nine months” and said the S&P 500 could drop another 20% depending on on whether the Fed is engineering a soft or hard landing.

The comments came at the start of a big week for bank earnings for the third quarter, and ahead of Wednesday’s producer price report, Thursday’s CPI report for September and Friday’s retail sales numbers, also for last month.

Investors’ reaction is focused solely on how the Federal Reserve reacts to the economy as it works to curb inflation.

“This is an awful market environment grappling with a weak economy, uncertainty about earnings and how long the Fed tightening will last, and sentiment issues with the psychology of very risk-averse investors,” said David Bahnsen, chief investment officer at The Bahnsen. group, in a note on Tuesday.

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“We think the Fed will raise rates one or two more times until the fed funds rate hits 4% and then pause, at which point the Fed will assess the damage that has been done,” he added.