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Wall St closes down for 3rd straight session on Fed rate hike worry

Published 08/30/2022, 05:20 AM
Updated 08/30/2022, 05:55 PM
© Reuters. A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 29, 2022. REUTERS/Brendan McDermid

(Updates to market close)

By Chuck Mikolajczak

(Reuters) - NEW YORK, Aug 30 (Reuters) - U.S. stocks closed lower for a third straight session on Tuesday as a rise in job openings fueled fears the U.S. Federal Reserve has another reason to maintain its aggressive path of interest rate hikes to combat inflation.

The benchmark S&P 500 index .SPX has tumbled more than 5% since Fed Chair Jerome Powell on Friday reaffirmed the central bank's determination to raise interest rates even in the face of a slowing economy.

Labor demand showed no signs of cooling as U.S. job openings rose to 11.239 million in July and the prior month was revised sharply higher. A separate report showed consumer confidence rebounded strongly in August after three straight monthly declines.

"They have to weaken the labor market and how are they going to do that – they are going to jam rates and make things so expensive that people are going to pull back, demand is going to fall off, and people are going to get laid off," said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.

"It locks them in even further."

The data increases the focus on the August non-farm payrolls data due on Friday.

The Dow Jones Industrial Average .DJI fell 308.12 points, or 0.96%, to 31,790.87, the S&P 500 .SPX lost 44.45 points, or 1.10%, to 3,986.16 and the Nasdaq Composite .IXIC dropped 134.53 points, or 1.12%, to 11,883.14.

New York Fed President John Williams said on Tuesday the central bank will likely need to get its policy rate about 3.5% and is unlikely to cut interest rates at all next year as it fights inflation.

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However, Atlanta Fed President Raphael Bostic said in an essay published on Tuesday the Fed could "dial back" from its recent string of 75 basis point hikes if new data shows inflation is "clearly" slowing. Richmond Fed President Thomas Barkin said the Fed's pledge to bring inflation down to its 2% goal will not necessarily result in a severe recession.

Traders are pricing in a 74.5% chance of a third straight 75-basis point rate hike at the Fed's September meeting. FEDWATCH

Each of the 11 S&P 500 sectors were in negative territory, with the energy sector .SPNY down 3.36%, the biggest percentage decliner, as oil prices settled down more than 5% on concerns that the slowing of global economies could sap demand. (Full Story)

Rate-sensitive megacap growth and technology stocks such as Microsoft Corp (NASDAQ:MSFT) MSFT.O, down 0.85%, and Apple Inc (NASDAQ:AAPL) AAPL.O, off 1.53%, were among the biggest drags on the benchmark index.

Both the S&P 500 and the Nasdaq have broken below their 50-day moving average. The S&P 500 also briefly fell below the 50% Fibonacci retracement level from its June low to August high, another key technical indicator watched by analysts as support.

(Graphic- SPX technical: https://fingfx.thomsonreuters.com/gfx/mkt/dwpkrwomovm/MicrosoftTeams-image%20(26).png)

The CBOE Volatility index, also known as Wall Street's fear gauge, rose for the third straight session and hit a six-week high at 27.69 points.

Adding to worries, Taiwan's military fired warning shots at a Chinese drone which buzzed an islet controlled by Taiwan near the Chinese coast. (Full Story)

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Best Buy Co (NYSE:BBY) BBY.N rose 1.61% as one of the biggest gainers on the S&P 500 after it reported a smaller-than-expected drop in quarterly comparable sales thanks to steep discounts.

Volume on U.S. exchanges was 10.51 billion shares, compared with the 10.54 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 4.27-to-1 ratio; on Nasdaq, a 2.44-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 18 new lows; the Nasdaq Composite recorded 15 new highs and 217 new lows.

Latest comments

Don’t forget Trump created more money in two months than since the signing of the constitution brandon *****too
Good thing we have Biden out there telling us what to do.
"rate hike worry" I am worried... i'm afraid FED won't do this to smash out all kind of spongers from financial and commodities markets
We are only thinking about interest rates, what about earnings? I expect a weak earnings season due to slowdown in major markets.
brk-b underperformed s&p 500 for last 5-years. old performance does not repeat. past performance is no guarantee for future performance
jpowell's fixation to emulating volcker is the problem, grossly misguided. things are different now from 70's. old approaches to new problems will not work. wrong person at wrong time
And the curtain rises for the "late trade" magic show.  Biggest investment joke in the world.
Pay attention to what the government is doing and the overall agenda. In my opinion everything is smoke and soon, new green energy stocks will emerge the winners! Traditional energy investment vehicles are topped out. The whole climate change agenda has been orchestrated to give investors a fresh platform to build on. Mark my words.
To bad none of them make money without government subsidy. Like real subsidy, not what liberals say oil gets.
Bla bla BIden this and Biden that, Trump this and Trump that. Don't you yanks ever get tired of the satire? Back in the days it was all smart comments on trading. Nowadays its all politics, politics and more politics. No substance. Bla bla bla.
And this all in maybe the most opportune moment in time to trade. Stop whinning and pay attention.
Well, that comment certainly raises the bar.
open door to hyperinflation. fed will rue alternative inflation for quite à White but they wanted it. right?the more diff you have between infl.and int. served, the more difficult is the catch up. they knew that. so be prepared for hyperinflation....full speed.
Despite spending trillions of dollars and democrats ending lockdowns when Brandon took office, the stock market has given up all gains since Brandon took office. Democrats spent Trumps' entire presidency complaining as the economy did great and stock market reached new highs even as he left office with lockdowns, meanwhile Brandon wiped it all out despite 40+ year inflation. Even with low unemployment has managed to produce 2 quarters of negative GDP growth. Gulags and breadlines are well on the way, thankfully republicans coming back into power in a few months.
u r delusional if you think republicans will win back the House or Senate. Why? Roe v Wade for starters, Jan 6 Hearing, Trump taking highly classified material with him when he left office, economy strong with record job openings, climate Bill passed... need I go on?
Biden has angered ever American except 20% of radical socialist authoritarians.
You're thinking of the other guy
Low unemployment, low labor force participation, lowest corporate productivity in decades, supply chain crisis, highest inflation in 40+ years, shrinking GDP despite low unemployment...if your goal is to become a socialist/communist country heading in the direction of gulags and breadlines, Brandon is doing a great job! Heck, Brandon was already able to create a baby formula shortage, Marx would be proud!
I think you should read more instead of shouting propaganda non sense. you loose too much energy by this bi partisan childish rhetoric...you want to change things ? perfect! s.up and go to politics and be elected with you program. fine for me.
some people says Biden died
 Also, nobody says Trump is still in the White House, they say he should be in the White House. Nice attempt at gaslighting, though.
  False.  There's Lin Wood and his followers, and there's this Cali history teacher, .... there's also Trump holding fake Cabinet meeting.
Carlos, your compatriots thinking Trump is still secretly in the White House: https://www.independent.co.uk/news/world/americas/us-politics/qanon-trump-white-house-photo-b1875494.html
always give fake news to people of world
Please stop insulting the fed you racist, sexist, homophobic Nazis. In case you did not know, "Leadership at the Federal Reserve has become its most diverse ever. There are more female, Black and gay officials contributing to the central bank’s interest-rate decisions than at any time in its 109-year history."-Associated Press. Anybody who insults the Fed is clearly insulting all the glories of "diversity" that the democrats and the Brandon regime have been telling us about.
Diversity is code for racist against White people and Biden can best be described as a racist who hates anyone who has White skin.
I think a lot of people like fed since they finally burst the bubble again and bears and Mm win lot of money including me but middle class and normal people feel pain hahahah in fact a log of people like fed
 Correction: Brandon loves children with white skin, loves sniffing them and showering with them
sell us gold
Raise your bid.
Quit twiddling your thumbs Jerome. You're not making a dent in inflation. Double the rate increase and let's get this show on the road.
so -2% everyday?
I agree. It's the return to fair value that we've been screaming for since 2008 -- and with very low unemployment. Well done, Biden!
 Low unemployment, low labor force participation, lowest corporate productivity in decades, supply chain crisis, highest inflation in 40+ years, shrinking GDP despite low unemployment...if your goal is to become a socialist/communist country with gulags and breadlines, Brandon is doing a great job!
Leftism/socialism ends in breadlines and gulags, and the Brandon regime has demonstrated this for us well in under two years.
Fact check: The markets and economy are not doing poorly because the Fed is raising interest rates, they are doing poorly because we have a demented potato in the White House pushing unsustainable leftist economy policy. There is a reason that socialism ends in breadlines and gulags. Brandon has put the economy into a situation of hyper-inflation and declining GDP, and the Fed can only print so much money to try and bail out bad economic policy.
Two words : JOE BIDEN!!! All you need to understand.
I think the only idiot on here may be you Brad. I could come up with more definitive adjective but will refraim.
I know! It is really idiotic to adhere to basic principles of sound reasoning. It's much more appealing (to the right-wing kooks, at least) to just bypass reasoning in favor of stating a predetermined conclusion. Silly me.
 I know! It is really id-iotic to adhere to basic principles of sound reasoning. It's much more appealing (to the right-wing kooks, at least) to just bypass reasoning in favor of stating a predetermined conclusion. Silly me.
SEC needs to perform an all-out investigation into the validity of the market and *****out the corruption. Clearly it is being manipulated and controlled. Good, solid companies with good fundamentals should not be declining as ***companies do. Complete BS!
Trade what you see, not what you believe and you'll do fine.
Seriously...the words w e e d and t u r d were blocked out...lol.
It's ridiculous isn't it? It is only an aggravation for users as we inconveniently have to modify spelling abroation, murrder, killling, weeeed, tuerd  and on and on. Apparently, of no concern to Investing.com however. What is the point, Investing.com?
Just wait and see what happens when the yield for the 2YR hits 4.0%. Nasdaq 9900-10000 here we come. Actual bottom may be lower.
Lay off the dope
in your dreams .. u really smoke high quality *******..
No dope. Many smaller tech companies carry a lot of debt. As rates rise, future profits are less and stocks go down.
every commodity in red
Well would ya look at that.  11AM and the laughingstock of the investing world magically reverses course, and losses are whisked out of the system.  Predictable enough for ya?  Flagrant enough for ya?  Wall Street financial defiles America in broad daylight with manipulation that a 5 year old could see.   A fraud that will never be equalled.
Entire system is purposely and precisely designed to be controlled and manipulated.
Losses NOT "whisked out".  It's still red.
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