September 26, 2022

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Wall Street falls for the fourth consecutive session based on Fed expectations

Wall Street falls for the fourth consecutive session based on Fed expectations

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, August 22, 2022. REUTERS/Brendan McDermid

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  • Snap jumps while restructuring the advertising business, laying off employees
  • Bed Bath & Beyond sinks into overhauling the company
  • Dow Jones down 0.57%, Standard & Poor’s 500 down 0.45%, Nasdaq down 0.26%

NEW YORK (Reuters) – U.S. stocks fell for a fourth straight session on Wednesday and were poised for their weakest August performance in seven years as concerns persisted about strong interest rate increases by the Federal Reserve.

Adding to the pressure was the decline in technology (.SPLRCT) sector, more specifically chip makers (.sox)after poor expectations from Seagate (STX.O)down by 3.42%, then HP Inc, which fell by 7.22%.

The three major indexes were on track for their biggest monthly percentage decline in August since 2015. After hitting a four-month high in mid-August, the S&P 500 has faltered in recent weeks, dropping more than 7% to Tuesday’s close and pulling back. Several levels of technical support are closely monitored.

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Selling pressure accelerated after Federal Reserve Chairman Jerome Powell’s hawkish comments on Friday about keeping monetary policy tight “for some time,” dashed hopes for a modest increase in interest rates, with the benchmark down more than 5% over the past four trading sessions.

“It’s been a tough move since President Powell’s speech at Jackson Hole, we’ve had such a huge day and there was some hope that the market might stabilize a bit, but every slight bounce was met with selling pressure,” Young said. -Yu Ma, chief investment strategist at BMO Wealth Management in Chicago.

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“The market is kind of returning to the macro picture, now somewhat recalibrated to anticipate more Fed tightening and the idea that the economy could slow more than expected, even the question about corporate earnings is back on the table.”

Cleveland Fed President Loretta Meester said Wednesday that the central bank will need to raise interest rates somewhat above 4% by early next year and keep them there in order to bring inflation back to the Fed’s target, and that the risks of a recession are over. The next year or two have gone up. Read more

Dow Jones Industrial Average (.DJI) It fell 181.55 points, or 0.57%, to 31,609.32 points. Standard & Poor’s 500 (.SPX) It lost 17.89 points, or 0.45%, to 3,968.27 points. And the Nasdaq (nineteenth) It fell 31.04 points, or 0.26%, to 11,852.09 points.

Data earlier in the day showed ADP private payrolls increased by 132 thousand in August, missing economists’ expectations for job growth of 288 thousand, according to a Reuters poll. However, the report for June and July was put on hold as the methodology was overhauled after a track record of poor performance in conjunction with the government payroll report. Read more

Jobs data from the Department of Labor is due on Friday and is expected to show a nonfarm payroll increase of 300,000 last month after recording a 528,000 increase in July. Another strong report is likely to bolster expectations that the Federal Reserve will continue to raise interest rates significantly after three consecutive increases of 75 basis points.

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Philadelphia Semiconductor Index (.sox) It lost 1.37% after Seagate cut its first-quarter earnings forecast, citing macroeconomic concerns that are forcing cloud companies and PC makers to cut inventory levels. Read more

In addition, HP Inc expected lower quarterly and full earnings as a result of slowing PC sales.

Snap Inc (SNAP.N)It rose 8.44% after it said it would cut 20% of staff, restructure its ad sales unit and close some projects to focus on improving sales and the number of Snapchat users. Read more

Chewy Inc fell 8.50% after the online pet supplies retailer cut its full-year 2022 sales forecast.

Bed Bath and Beyond Inc (BBBY.O) It fell 21.87% after it said it will close 150 stores, cut jobs and overhaul its business strategy in an effort to turn around its losing business. Read more

Low issues outnumbered advanced issues on the New York Stock Exchange by 1.93 to 1; On the Nasdaq, the ratio was 1.27 to 1 in favor of declining stocks.

S&P 500 hits no new 52-week highs and 11 new lows; The Nasdaq Composite recorded 12 new highs and 161 new lows.

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(Reporting by Chuck Mikolajchak) Editing by Jonathan Otis

Our criteria: Thomson Reuters Trust Principles.