Wall Street Tests Lows in June on Recession Concerns

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  • All three major indices set for sharp weekly losses
  • Costco Drops After Falling Quarterly Gross Margins
  • Indices down: Dow 1.36%, S&P 1.73%, Nasdaq 1.99%

23 Sept. (Reuters) – Wall Street’s major indices fell on Friday as investors worried about the prospect of an economic downturn and a blow to corporate profits from the US Federal Reserve’s aggressive tightening measures to suppress inflation.

The Dow (.DJI) broke through its mid-June low on an intraday basis, reaching 29,643.93 points, hitting a nearly two-year low.

The S&P 500 (.SPX) and Nasdaq (.IXIC) are also approaching mid-June lows, their weakest points for the year.

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Both the S&P 500 and Nasdaq are already in bear markets, falling more than 22% and 30% so far this year, respectively, amid concerns about a host of issues, including the conflict in Ukraine and tighter financial conditions. all over the world.

The US central bank raised rates by a widely expected 75 basis points on Wednesday and signaled a longer trajectory for key rates, threatening hopes that the Fed expects to get inflation under control in the near term.

“The latest Fed moves make us feel like the end of the rate hikes is not near,” said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.

“There’s very little positive news at the moment and it could lead to some sort of final sell-off… it’s certainly possible that we’re approaching short-term lows.”

The bleak outlook of a handful of companies — most recently FedEx Corp (FDX.N) and Ford Motor Co (FN) — have also contributed to the woes in a seasonally weak period for markets.

Goldman Sachs lowered its year-end 2022 target for the benchmark S&P 500 Index (.SPX) by about 16% to 3,600 points, down 2.5% from current levels. read more

At 10:08 a.m. ET, the Dow Jones Industrial Average (.DJI) fell 408.50 points, or 1.36%, at 29,668.18, the S&P 500 (.SPX) fell 65.07 points, or 1.73 %, at 3,692.92 and the Nasdaq Composite (.IXIC) fell 220.27 points, or 1.99%, to 10,846.54.

All three indices were set for significant weekly losses.

Technology and growth stocks fell by mega-cap names, including Alphabet Inc (GOOGL.O), Apple Inc (AAPL.O), Amazon.com (AMZN.O), Microsoft Corp (MSFT.O) and Tesla Inc (TSLA.O) all down more than 1%.

All 11 major S&P sectors fell in early trading, led by a 5.6% decline in energy stocks (.SPNY). Banks (.SPXBK) fell 1.6%.

Costco Wholesale Corp (COST.O) lost 2.4% after the big box retailer reported a decline in profit margins in the fourth quarter. read more

The CBOE Volatility Index (.VIX), also known as the Wall Street fear meter, rose to 28.72 points.

Meanwhile, Fed Chair Jerome Powell will make an opening statement about the transition to a post-pandemic economy at an event at 2 p.m. ET.

The number of declining issues surpassed the avant-garde by a ratio of 11.33 to 1 on the NYSE and a ratio of 6.67 to 1 on the Nasdaq.

The S&P index did not record a new 52-week high and 125 new lows, while the Nasdaq recorded seven new highs and 558 new lows.

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Reporting by Ankika Biswas and Devik Jain in Bengaluru; Editing by Shounak Dasgupta

Our Standards: The Thomson Reuters Trust Principles.

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