February 4, 2023

Raven Tribune

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Wall Street closed lower for the third day in a row as recession fears grew

Wall Street closed lower for the third day in a row as recession fears grew

  • Business activity in the United States declined in December
  • Meta jumps when JP Morgan’s rating upgrade
  • Adobe rises based on optimistic earnings expectations
  • The Dow Jones fell 0.85%, the Standard & Poor’s 500 fell 1.11% and the Nasdaq fell 0.97%.

NEW YORK (Reuters) – U.S. stocks fell for a third straight session and posted losses for a second consecutive week on Friday, as concerns persisted that the Federal Reserve’s campaign to halt inflation could push the economy into recession.

Stocks have faltered since the US central bank’s decision to raise interest rates by 50 basis points, as expected. But comments from Fed Chairman Jerome Powell indicated further policy tightening, and the central bank predicted that interest rates would cross the 5% mark in 2023, a level not seen since 2007.

Other comments from Federal Reserve officials raised concerns. New York Federal Reserve Bank President John Williams said on Friday that it is still possible for the US central bank to raise interest rates more than it expects next year. The policy maker added that he does not expect a recession due to aggressive Fed tightening.

Additionally, Mary Daly, President of the Federal Reserve Bank of San Francisco, said it’s “reasonable” to think that once Fed policy rates peak, they can stay there until 2024.

“It’s as if the market is finally starting to realize that bad news is bad news, and that’s what is starting to happen. Since the October lows, the market has continued to price in what I would consider a significant amount of optimism at stake,” said Dave Wagner, equity analyst and portfolio manager at Aptos Capital Advisors. In Cincinnati, the fact that the Fed can step in and try a soft landing is a success.

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“Finally, the market takes into account that bad news must mean bad things for the market.”

Dow Jones Industrial Average (.DJI) It fell 281.76 points, or 0.85%, to 32,920.46 points. Standard & Poor’s 500 (.SPX) It lost 43.39 points, or 1.11%, to 3,852.36 points. and the Nasdaq Composite (nineteenth) It fell 105.11 points, or 0.97%, to 10,705.41 points.

Over the week, the Dow lost 1.66%, the S&P fell 2.09% and the Nasdaq fell 2.72%.

Money market bets show at least two interest rate hikes of 25 basis points in the next year and a final rate of about 4.8% by mid-year, before it drops to around 4.4% by the end of 2023.

On the economic front, a report showed that US business activity contracted further in December with new orders dropping to their lowest level in just over two-and-a-half years, although easing demand helped calm inflation.

The tech-heavy Nasdaq closed Thursday below its 50-day moving average, a key technical level seen as a sign of momentum. On Friday, the S&P also closed below the 50-day moving average.

The prospects for a “Santa Claus rebound,” or year-end rally, in markets have diminished this year, as the majority of global central banks have adopted tightening policies. The Bank of England and the European Central Bank were the latest to signal an extension of the rate hike cycle on Thursday.

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Reuters Graphics Reuters

Markets trimmed losses in the last hour of trading, however, perhaps in part because expiration of stock options, stock index futures, and index options contracts, known as the magic triple, can exacerbate market volatility.

Each of the 11 major sector indices of the S&P 500 was in the red, driven by a drop of more than 2.96% in real estate stocks. (.SPLRCR).

Meta Platforms Inc (META.O) It advanced 2.82% after JP Morgan raised the stock to “overweight” from “neutral,” while Adobe Inc. (ADBE.O) It gained 2.99% after the Photoshop maker forecast higher-than-expected first-quarter earnings.

Exact Sciences Corporation (EXAS.O) It jumped 16.39% after rival Guardant Health Inc’s (GH.O) Cancer test exceeded expectations, while General Motors (GM.N) It lost 3.91% after its robotaxi Cruise unit faced a safety investigation by US auto safety regulators.

Trading volume on US exchanges reached 17.28 billion shares, compared to the average of x.xx billion for the full session over the last 20 trading days.

Low issues outnumbered high issues on the NYSE by a ratio of 2.47 to 1; On the Nasdaq, the ratio was 1.66 to 1 in favor of declining stocks.

S&P 500 hits a new 52-week high and 18 new lows; The Nasdaq index posted 79 new highs and 392 new lows.

(Reporting by Chuck Mikolajczak) Editing by Jonathan Otis

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