January 31, 2023

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The S&P 500 is down as stocks struggle through the end of the year

The S&P 500 is down as stocks struggle through the end of the year

Traders work on the trading floor of the New York Stock Exchange (NYSE) in New York City, US, December 14, 2022.

Andrew Kelly | Reuters

Stocks fell on Monday after the major averages posted a second straight week of losses for the first time since September as investors weighed recession fears.

The Dow Jones Industrial Average lost 67 points, or 0.21%, slightly offset by gains in 3M, Walgreens Boots Alliance and Travelers, which were all up more than 1%. The S&P 500 fell 0.60% and the Nasdaq Composite fell 1.22%, dragged down by Amazon shares, which fell 3%.

The moves came after another downward week for stocks The Federal Reserve raised the short-term interest rate by 50 basis points Higher rates are indicated for longer. Recession fears mounted as the central bank raised its forecast for future hikes above previous expectations, saying it now expects to raise interest rates to 5.1%.

“As we approach the end of December, investors are still waiting for the Santa Claus rally, with stocks falling for consecutive weeks for the first time since September,” said Chris Larkin, managing director of trading at E*Trade. From Morgan Stanley. “Data showing inflation slowing may have given the market a short-term boost, but the Fed’s firmness with Powell has pushed home the point that interest rates can stay high for an extended period is likely cause for some investors.”

Shares are set for a dismal month in December. On Friday, the Dow Jones fell 281.76 points, or 0.85%. The 30-share index fell 1.66% during the week, bringing its monthly losses to 4.83%. The S&P 500 fell 1.11% and declined 2.08% for the week, extending its monthly declines to 5.58%. The Nasdaq Composite fell 0.97% on Friday and 2.72% for the week. It is down 6.65% this month.

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Investors will also be watching for some earnings reports due later in the week. FedEx and Nike are both scheduled to report earnings results on the Tuesday after the market closes. As recession fears mount, earnings results will become more focused.

“Ranks and inflation may have peaked, but we see that as a warning signal for profitability, a fact we believe remains underappreciated but can no longer be ignored,” Michael Wilson, an equity strategist at Morgan Stanley, wrote in a note Monday.