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Wall Street ends down for third day as growth concerns weigh on tech

Economy Sep 22, 2022 07:11PM ET
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© Reuters. FILE PHOTO: A Wall St. street sign is seen near the New York Stock Exchange (NYSE) in New York City, U.S., September 17, 2019. REUTERS/Brendan McDermid/File Photo
 
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By David French

(Reuters) - Major Wall Street indexes ended lower on Thursday, falling for a third straight session as investors reacted to the Federal Reserve's latest aggressive move to rein in inflation by selling growth stocks, including technology companies.

The Fed lifted rates by an expected 75 basis points on Wednesday and signaled a longer trajectory for policy rates than markets had priced in, fuelling fears of further volatility in stock and bond trading in a year that has already seen bear markets in both asset classes.

The U.S. central bank's projections for economic growth released on Wednesday were also eye-catching, with growth of just 0.2% this year, rising to 1.2% for 2023.

Jitters were already present in the market after a number of companies - most recently FedEx Corp (NYSE:FDX) and Ford Motor (NYSE:F) Co - issued dire outlooks for earnings.

As of Friday, the S&P 500's estimated earnings growth for the third quarter is at 5%, according to Refinitiv data. Excluding the energy sector, the growth rate is at -1.7%.

The S&P 500's forward price-to-earnings ratio, a common metric for valuing stocks, is at 16.8 times earnings - far below the nearly 22 times forward P/E that stocks commanded at the start of the year.

Nine of the 11 major S&P sectors fell, led by declines of 2.2% and 1.7%, respectively, in consumer discretionary and financial stocks.

Shares of megacap technology and growth companies such as Amazon.com Inc (NASDAQ:AMZN), Tesla (NASDAQ:TSLA) Inc and Nvidia (NASDAQ:NVDA) Corp fell between 1% and 5.3% as benchmark U.S. Treasury yields hit an 11-year high. [US/]

Rising yields weigh particularly on valuations of companies in the technology sector, which have high expected future earnings and form a significant part of the market-cap weighted indexes such as the S&P 500.

The S&P 500 tech sector has slumped 28% so far this year, compared with a 21.2% decline in the benchmark index.

"If we continue to have sticky inflation, and if (Fed Chair Jerome) Powell sticks to his guns as he indicates, I think we enter recession and we see significant drawdown on earnings expectations," said Mike Mullaney, director of global markets at Boston Partners.

"If this happens, I have high conviction under those conditions that we break 3,636," he added, referring to the S&P 500's mid-June low, its weakest point of the year.

The Dow Jones Industrial Average fell 107.1 points, or 0.35%, to 30,076.68, the S&P 500 lost 31.94 points, or 0.84%, to 3,757.99 and the Nasdaq Composite dropped 153.39 points, or 1.37%, to 11,066.81.

Major U.S. airlines - which have enjoyed a rebound amid increased travel as pandemic restrictions end - were also down, with United Airlines and American Airlines (NASDAQ:AAL) falling 4.6% and 3.9% respectively. This took losses in the last three days to 11% for United and 10.6% for American.

JetBlue Airways (NASDAQ:JBLU) Corp, off 7.1% and also recording a third straight loss, closed at its lowest level since March 2020.

Darden Restaurants Inc (NYSE:DRI) slid 4.4% after the Olive Garden parent reported downbeat first-quarter sales.

Volume on U.S. exchanges was 11.39 billion shares, compared with the 10.91 billion average for the full session over the last 20 trading days.

The S&P 500 posted one new 52-week high and 123 new lows; the Nasdaq Composite recorded 18 new highs and 699 new lows.

Wall Street ends down for third day as growth concerns weigh on tech
 

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Comments (20)
Tauhid Kazemi
Tauhid Kazemi Sep 22, 2022 4:28PM ET
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buy the dips thats all
Mitchel Pioneer
Mitchel Pioneer Sep 22, 2022 2:58PM ET
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This could well be the biggest JOKE of a "trading" day this year.  Look at savvy "investors" all rushing in at the same time to "buy," then magically, the "buying" stops just as the DOW goes green.  Over and over, the DOW "rallies" out of a loss to a "gain," and the "buying" mysteriously stops.  How anyone in their right mind can take this criminally rigged casino serious is beyond me.
First Last
First Last Sep 22, 2022 2:58PM ET
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When tmrrw rolls around, you'll call that the "biggest".
First Last
First Last Sep 22, 2022 2:58PM ET
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Just like you called yesterday the "biggest".
Adi Avivi
Adi Avivi Sep 22, 2022 2:58PM ET
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these are algos. instead of fighting them.. join them. do not read fundamentals figures. just trade the gaps. it works every time
rene topeka
rene topeka Sep 22, 2022 2:58PM ET
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only trader and investors flee from the scene. long and short, sideways at it best. great for good trader but not me , haha
Tauhid Kazemi
Tauhid Kazemi Sep 22, 2022 2:58PM ET
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I guess who complains alot means they lost money 💰
amt hun
amt hun Sep 22, 2022 2:40PM ET
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Feels like the quiet before the storm.
khunpet petnoi
khunpet petnoi Sep 22, 2022 2:40PM ET
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but really all this people did not understand yet that the only way to gain money in this times is to buy inverse leverage ETFs???
Mitchel Pioneer
Mitchel Pioneer Sep 22, 2022 1:37PM ET
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Another display of pure, criminal intervention.  Look at all this credible "buying."  Fraudulent, criminally manipulated JOKE.
David Bodah
David Bodah Sep 22, 2022 1:30PM ET
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My trailing stop losses are starting to fill. 4% 2 year CD’s are comforting at this time.There good investments and there are long term investments. But there are no good long term investments.Stay flexible my friends.
drgirish kullolli
drgirish kullolli Sep 22, 2022 1:03PM ET
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if, u cry everday nobody whife ur tears
David Bodah
David Bodah Sep 22, 2022 1:03PM ET
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When you laugh, the world laughs with you…..
drgirish kullolli
drgirish kullolli Sep 22, 2022 1:03PM ET
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how many days bri
drgirish kullolli
drgirish kullolli Sep 22, 2022 1:03PM ET
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how many days bro
Buy And Sell
Buy And Sell Sep 22, 2022 12:56PM ET
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Sell now or go broke later!!!
Chad Richer Than You
Chad Richer Than You Sep 22, 2022 12:56PM ET
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You're probably broke already, hysterical doomsdayer xD
Mitchel Pioneer
Mitchel Pioneer Sep 22, 2022 12:53PM ET
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One fraudulent injection after another.  The biggest JOKE of a "trading" day this year, as the FRAUD unfolds in broad daylight.  Why not just hand place the laughingstock of the financial world at 40K if the manipulation is going to be this egregious?
Gordan Zamic
Gordan Zamic Sep 22, 2022 12:46PM ET
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yeah,,it's best thing to f....up everything to ground zero and start diging holes and hunt animals to survive...just hike 200 points maybe even then won't be enough...💩
 
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