Wall Street ended a miserable September with a 9.3% drop, its worst monthly drop since March 2020. The S&P 500 Index fell 1.5% on Friday and is at its lowest point. for almost two years. The benchmark index has lost ground in six of the past seven weeks and posted its third consecutive quarter of losses. The Dow The Jones Industrial Average lost 1.7% and Nasdaq down 1.5%. Nike fell sharply after the company had to cut prices to clear inventory, while Carnival fell after weaker-than-expected quarterly results. The bond market was calmer as yields fell.
Wall Street is at its worst in nearly two years on Friday, ending a bad month for markets around the world.
The S&P 500 index fell 0.4% in afternoon trading after reversing course between small losses and gains throughout the morning. It is at its lowest level since November 2020 and is on track to end its sixth weekly loss in the past seven months, one of the worst months since the coronavirus crash of early 2020 and the third consecutive quarter. further lost.
The Dow Jones Industrial Average was down 213 points, or 0.7%, at 29,010 by 1:56 p.m. ET, and the Nasdaq composite was down 0.2%.
The main reason for the struggles for financial markets this year is fear of a possible recession, as interest rates soar in hopes of beating the high inflation sweeping the world.
The Federal Reserve has been at the forefront of a global campaign to slow economic growth and hurt the job market just enough to bring down inflation but not so much that it causes a recession. More data released on Friday suggests the Fed will keep its footing on the economy, increasing the risk of it going too far and triggering a recession.
The Fed’s Preferred Inflation Measure showed last month the situation was worse than economists expected. That should help the Fed keep raising rates and keep them high for a while, as it has loudly and repeatedly promised to do.
Vice President Lael Brainard is the latest Fed official on Friday to insist they won’t pull rates back up anytime soon. That has helped quell Wall Street hopes for an easier rate “pivot” as economic growth slows.
Sean Sun, portfolio manager at Thornburg Investment Management, said: “At this point, it’s not about whether we have a recession but what that recession looks like,” said Sean Sun, Portfolio manager at Thornburg Investment Management.
Higher interest rates knock down one of the key levers that set stock prices. Other leverages are also at stake as economic growth slows, high interest rates and other factors affect corporate profitability.
Cruise ship operator Carnival fell 21% in one of Wall Street’s worst losses after the company reported a larger loss in its most recent quarter than analysts expected. Revenue and revenue are not as expected.
Nike fell 12.1% on what could be its worst day in two decades after it said its profits weakened over the summer as it needed discounts to clear suddenly overwhelmed warehouses. Nike’s inventory of shoes and gear increased 44% from a year earlier.
The strong surge in the US dollar this year against other currencies also hurts Nike. Its worldwide revenue grew only 4%, instead of 10% if the monetary value had stayed the same.
Nike isn’t the only company seeing its inventory skyrocket. So there are some big-name retailers, and such bad news for businesses could actually mean some relief for shoppers if it leads to more discounts. It echoed some of the rays of encouragement buried in Friday’s report on the Fed’s preferred inflation gauge. That suggests a slowdown in inflation for goods, even as price increases continue to accelerate rapidly for services.
Another report on Friday also offered a glimmer of hope. A gauge of consumer sentiment showed US expectations for future inflation fell in September. That’s important for the Fed because held tight expectations for higher inflation can create a debilitating, self-reinforcing cycle that makes it worse.
Treasury yields fell slightly on Friday, easing some of the pressure exerted in the market.
Yields on the 10-year Treasury note fell to 3.75% from 3.79% late Thursday. The two-year yield, which more closely tracks expectations for Fed action, fell to 4.16% from 4.19%.
However, a long list of other worries continue to plague global markets, including rising tensions between much of Europe and Russia following the invasion of Ukraine. A controversial plan by the British government to cut taxes has also sent bond markets reeling recently on fears it could make inflation even worse. The bond market softened only slightly after the Bank of England pledged to buy midweek, but more UK government bonds are needed to reduce yields.
Gorgeous and US dollar rising rapidly Meanwhile, compared to other currencies, increases the risk of creating so much stress that something cracks in the global markets.
Stocks around the world were mixed after a report showed inflation in Europe’s 19 euro countries. skyrocketed to a record and data from China says factory activity weakens there.
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