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S&P, Nasdaq extend losing streaks amid rising recession worries

Economy Dec 07, 2022 06:31PM ET
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© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 29, 2022. REUTERS/Brendan McDermid
 
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By David French

(Reuters) - The S&P 500 and Nasdaq closed down on Wednesday after a choppy session on Wall Street, as investors struggled to grasp a clear direction as they weighed how the Federal Reserve's monetary policy tightening might feed through into corporate America.

For the benchmark S&P 500, it was the fifth straight session that it has declined, while the Nasdaq finished down for the fourth time in a row. The Dow snapped a two-session losing streak, as it ended unchanged from the previous day.

The Nasdaq was dragged down by a 1.4% drop in Apple Inc (NASDAQ:AAPL) on Morgan Stanley (NYSE:MS)'s iPhone shipment target cut and a 3.2% fall in Tesla (NASDAQ:TSLA) Inc over production loss worries.

Markets have also been rattled by downbeat comments from top executives at Goldman Sachs Group Inc (NYSE:GS), JPMorgan Chase & Co (NYSE:JPM) and Bank of America Corp (NYSE:BAC) on Tuesday that a mild to more pronounced recession was likely ahead.

Fears that the U.S. central bank might stick to a longer rate-hike cycle have intensified recently in the wake of strong jobs and service-sector reports.

More economic data, including weekly jobless claims, producer price index and the University of Michigan's consumer sentiment survey this week, will be on the watch list for clues on what to expect from the Fed on Dec. 14.

"It feels like we're in this very uncertain period where investors are trying to ascertain what's more important, as policymakers are slowing down on rates but the data is not playing ball," said Craig Erlam, senior market analyst at OANDA.

"The market is trying to balance the headwinds and the tailwinds and this is causing some confusion."

The CBOE volatility index, also known as Wall Street's fear gauge, closed at 22.68, its highest finish since Nov. 18.

Money market participants see a 91% chance that the Fed will increase its key benchmark rate by 50 basis points in December to 4.25%-4.50%, with rates peaking in May 2023 at 4.93%.

The S&P 500 lost 7.34 points, or 0.19%, to close at 3,933.92 and the Nasdaq Composite dropped 56.34 points, or 0.51%, to finish at 10,958.55. The Dow Jones Industrial Average was flat, ending on 33,597.92.

Concerns about a steep rise in borrowing costs have boosted the dollar, but dented demand for risk assets such as equities this year. The S&P 500 is on track to snap a three-year winning streak.

Three of the 11 major S&P sector indexes were higher, with healthcare one of them. Technology and communication services, down 0.5 and 0.9% respectively, were the worst performers.

Energy fell for its fifth straight session. The sector's performance was weighed by U.S. crude prices falling again, settling at the lowest level in 2022, as concerns over the outlook for global growth wiped out all of the gains since Russia's invasion of Ukraine exacerbated the worst global energy supply crisis in decades.

Carvana Co (NYSE:CVNA) had its worst day as a public company, losing nearly half its stock value, after Wedbush downgraded the used-car retailer's stock to "underperform" from "neutral" and slashed its price target to $1.

Meanwhile, United Airlines traded 4.1% lower. Unions representing various workers at the airline said they would join forces on contract negotiations.

Travel-related stocks were generally down. Delta Air Lines (NYSE:DAL) and American Airlines (NASDAQ:AAL) Group were 4.4% and 5.4% lower respectively, with cruise line operators Carnival (NYSE:CCL) Corp and Norwegian Cruise Line (NYSE:NCLH) Holdings and accommodation-linked Airbnb Inc and Booking Holdings (NASDAQ:BKNG) all falling between 1.7% and 4.4%.

Volume on U.S. exchanges was 10.29 billion shares, compared with the 10.98 billion average for the full session over the last 20 trading days.

The S&P 500 posted seven new 52-week highs and seven new lows; the Nasdaq Composite recorded 61 new highs and 307 new lows.

S&P, Nasdaq extend losing streaks amid rising recession worries
 

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Comments (14)
John XYZ
John XYZ Dec 08, 2022 8:44AM ET
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We are already in second part of recession. This week market price does not matter. Next Tuesday when we may see another half of percent drop for CPI yoy (7.2%) may be the only thing that matters, since FED meeting starts immediately after. 9.1, 8.5, 8.3, 8.2, 7.7, are last 5 months numbers. The direction is cristal clear.
James Hilsher
JCH007 Dec 07, 2022 10:51PM ET
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Problem with the market is that it has lost its integrity. Since the pandemic, it is now being run by a bunch of juvenile snowflakes with their support animals, programming the algorithms to react with their feelings, turning the market into a freaking casino, where nothing makes sense, fundamentals don't matter, and companies aren't allowed to stand on their own merits, but are constantly subjected to extreme volatility because this person said that, or that person said this. Absolutely ridiculous what the market has become. A complete joke.
Tilak Mundu
tluck Dec 07, 2022 8:39PM ET
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what a joke
Don Vo
Don Vo Dec 07, 2022 6:19PM ET
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Like i said earlier, market will bankrupt
Mitchel Pioneer
Mitchel Pioneer Dec 07, 2022 1:54PM ET
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Yep, savvy “investors” just can’t wait to load up on the most grossly overvalued equities in history today. Another day of magic and criminal miracles. Biggest investment JOKE in the world.
amt hun
amt hun Dec 07, 2022 12:56PM ET
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No recession worries here. Year end is coming, thus fonds are cashing in some assets to pay yields and manager bonuses. Many retailers are cashing in as well to have money for buying Christmas presents.
Tom Michaels
Tom Michaels Dec 07, 2022 11:27AM ET
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Fake, look at the jobs report, our economy is doing good. it's all fraudulent.
tim banks
tim banks Dec 07, 2022 11:27AM ET
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economy is fine. stock market is built on fed money though
Steven ML
Steven ML Dec 07, 2022 11:27AM ET
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Demand up -> prices up -> interest rates up -> you do the math
me ish
me ish Dec 07, 2022 11:24AM ET
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a deep recession is clearly coming - shipping containers from China are down by a half in last few weeks - and that's demand reasons, not Chinese manufacturing supply reasons it's going to be a very weak 4th quarter with tonnes of inventory to be moved at massive discounts in the first and second qtr of next year - that's going to massively impact profits meanwhile any sign of economic weakness globally- especially from China and OPEC plus are going to massively cut oil output to keep prices elevated during a winter period when fuel is needed more - especially for heating homes and businesses - AND biden has to now replenish the staregic petroleum reserves which he used up to keep a lid on inflation in the run up to the elections - now elections are over, he can fleece the American public even more - inflation is going to be very sticky, even if it goes down a bit, whilst a deep recession kicks in - as Dimon mentioned a few months ago
Stan Smith
Stan Smith Dec 07, 2022 9:54AM ET
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We've been in a recession for months...why all the worry now? Get these stocks up!!
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Brad Albright
Brad Albright Dec 07, 2022 9:54AM ET
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I understand that for the last quarter, GDP rose by 2.9%. So I'm going to rightly consider you uninformed.
Stan Smith
Stan Smith Dec 07, 2022 9:54AM ET
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wrongfully considered...go back under your rock
Brad Albright
Brad Albright Dec 07, 2022 9:54AM ET
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Sorry I embarrassed you. I'm sure you are a nice person.
Stan Smith
Stan Smith Dec 07, 2022 9:54AM ET
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Brad Albright  Not at all... you're embarrassing yourself. Do some proper research and you will be enlightened
me ish
me ish Dec 07, 2022 9:54AM ET
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Brad Albright  two consecutive negative GDP numbers, admintedly then followed by a revised upwards positive 3rd quarter number - it's a rapidly slowing economy in many sectors and still booming amongst those with plenty of assets - a tale of two cties
Tom Michaels
Tom Michaels Dec 07, 2022 9:51AM ET
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Cry cry cry. recession bull$#@&, No way people
 
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