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Wall St drops to two-month lows as recession fears mount

Economy Sep 16, 2022 06:30PM ET
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© Reuters. FILE PHOTO: Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar/File Photo
 
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(Refiles to insert dropped word "like" in quote, paragraph 4)

By Stephen Culp

NEW YORK (Reuters) -U.S. stocks ended in the red on Friday, falling to two-month lows as a warning of impending global slowdown from FedEx hastened investors' flight to safety at the conclusion of a tumultuous week.

All three major U.S. stock indexes slid to levels not touched since mid-July, with the S&P 500 closing below 3,900, a closely watched support level.

Staggering past the finish line of a week rattled by inflation concerns, looming interest rate hikes and ominous economic warning signs, the S&P 500 and the Nasdaq suffered their worst weekly percentage plunges since June.

"It’s been a tough week. It feels like Halloween came early," said David Carter, managing director at JPMorgan (NYSE:JPM) in New York. "We are facing in this toxic brew of high inflation, high interest rates and low growth, which isn’t good for stock or bond markets."

Risk-off sentiment went from simmer to boil in the wake of FedEx Corp (NYSE:FDX)'s withdrawal of its earnings forecast late Thursday, citing signs of dampening global demand.

FedEx's move followed remarks from the World Bank and the IMF, both of which warned of an impending worldwide economic slowdown.

A deluge of mixed economic data, dominated by a hotter-than-expected inflation report (CPI), cemented an interest rate hike of at least 75 basis points at the conclusion of the Fed's monetary policy meeting next week.

"While the market is expecting a big bump in the Fed’s rates next week, there is tremendous uncertainty and concern about future rate increases," Carter added. "The Fed is doing what it needs to do. And after some pain, markets and the economy will heal themselves."

Financial markets have priced in a 18% likelihood of a super-sized, 100 basis point increase to the Fed funds target rate on Wednesday, according to CME's FedWatch tool..

The Dow Jones Industrial Average fell 139.4 points, or 0.45%, to 30,822.42, the S&P 500 lost 28.02 points, or 0.72%, to 3,873.33 and the Nasdaq Composite dropped 103.95 points, or 0.9%, to 11,448.40.

Nine of the 11 major sectors of the S&P 500 ended in negative territory, with energy and industrials suffering the sharpest percentage drops.

Dow Transports, viewed as a barometer of economic health, plummeted 5.1%.

That drop was led by FedEx shares tanking by 21.4%, the biggest drop in the S&P 500.

Peers United Parcel Service (NYSE:UPS) and XPO Logistics (NYSE:XPO) slid 4.5% and 4.7%, respectively, while Amazon.com Inc (NASDAQ:AMZN) slipped 2.1%.

The session also marked the monthly options expiry, which occurs on the third Friday of every month. Options-hedging activity has amplified market moves this year, contributing to heightened volatility.

The CBOE Market Volatility index, often called "the fear index," touched a two-month high, breezing past a level associated with heightened investor anxiety.

Declining issues outnumbered advancing ones on the NYSE by a 3.04-to-1 ratio; on Nasdaq, a 2.24-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 56 new lows; the Nasdaq Composite recorded 21 new highs and 387 new lows.

Volume on U.S. exchanges was 16.92 billion shares, compared with the 10.72 billion average for the full session over the last 20 trading days.

Wall St drops to two-month lows as recession fears mount
 

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Comments (42)
Kerry Ditto
Kerry Ditto Sep 16, 2022 5:13PM ET
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congress should enact banning any interest hiking by Fed during a war US is engaging for national security like ukraine war. the sooner enacted, the better. when nation's survival is at stake, trivial things like interest rates don't matter. the nation should survive first. key thing here is raising interest rates now will help the enemy.
Jimmy Doodoo
JimmyD Sep 16, 2022 5:13PM ET
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We are not at war with anyone.
tiago quental
tiago quental Sep 16, 2022 5:13PM ET
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when interest rates are at zero levels and assets reach unreasonable prices, everyone is okay.. when the government steps in to correct prices and valuations, in a way to preserve future generations capacity to acquire assets at reasonable prices, everyone loses their minds..
rob Tucker
rob Tucker Sep 16, 2022 5:13PM ET
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This administration does not care about our nation. They want to destroy it
First Last
First Last Sep 16, 2022 5:13PM ET
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Jimmy Doodoo   That's not what the Kremlin is saying
G D
G D Sep 16, 2022 5:13PM ET
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Tell me how much your picks are down Kerry
Ma Lu
Ma Lu Sep 16, 2022 4:37PM ET
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Next week will be even worse because of the FED decision.
Kerry Ditto
Kerry Ditto Sep 16, 2022 4:25PM ET
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Natural gas, -6% today is a very bullish sign. Hope Ukraine war gets over with peace for humanity.
Kerry Ditto
Kerry Ditto Sep 16, 2022 3:41PM ET
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liquidity glut for humanity
Kerry Ditto
Kerry Ditto Sep 16, 2022 3:39PM ET
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liquidity glut is beautiful gift for humanity
Kerry Ditto
Kerry Ditto Sep 16, 2022 3:29PM ET
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glut of liquidity exists. massive liquidity inflows to us from other countries add the glut. glut is good
Kerry Ditto
Kerry Ditto Sep 16, 2022 3:24PM ET
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early morning trade magic down show ended, now reverse upside action kicked in
Mitchel Pioneer
Mitchel Pioneer Sep 16, 2022 2:48PM ET
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And the "late trade" magic show begins, right on schedule.  The greatest financial fraud in the world on full display.  What's next, another green-across-the-board miracle?  Criminally manipulated JOKE.
Prabhat Negi
Prabhat Negi Sep 16, 2022 2:48PM ET
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it's all about leverage trading nowadays. no one gives a damn about fundamentals and economy
Prison Mike
Prison Mike Sep 16, 2022 2:48PM ET
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Your comments always get my thumbs up. I'm your biggest groupie. I'm also sure you're secretly some legend like Michael Burry or Warren Buffet based on your market analysis.
Jack Peterson
Jack Peterson Sep 16, 2022 2:37PM ET
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Thanks J2 (Biden & Manchin) for stoking inflation even further with the Hyperinflation Act of 2022! Just wait until that kicks in next year after the elections…. Hmmmm
Sulabh Tripathi
Sulabh Tripathi Sep 16, 2022 2:29PM ET
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Bulls are just Emotionally bullish... Rationality has been thrown out of the window... this is the Bitter truth....
 
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