The S&P 500 on Friday closed the books on its steepest September decline in two decades, skidding across the finish line of a tumultuous quarter fraught with historically hot inflation, rising interest rates and recession fears.
All three major indexes veered to a sharply lower end, after quashing a brief rally early in the session.
The S&P and the Dow Jones Industrial Average notched their third consecutive weekly declines, and all three indexes posted their second straight monthly losses.
In the first nine months of the year, Wall Street suffered three quarterly declines in a row, the longest losing streak for the S&P and the NASDAQ since 2008 and the Dow’s longest quarterly slump in seven years.
“It’s another ugly day to end an ugly quarter in what’s looking like a very ugly year,” said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. “Investors will look back and realize this was the year the Fed pulled a total 180 on their views on inflation and quickly turned incredibly hawkish.”
RATTLED
Photo: AFP
The US Federal Reserve has rattled markets by engaging in its most relentless series of interest rate hikes in decades to rein in stubbornly high inflation, which has many market participants eyeing key economic data for signs of a looming recession.
“The realization that the Fed is doing anything they can to combat 40-year-high inflation has investors worried they will push the economy over the edge and into recession,” Detrick added.
The US Department of Commerce’s personal consumption expenditures report did little to assuage those fears, showing that while consumers continue to spend, the prices they are paying have accelerated, drifting further beyond the Fed’s inflation target and all but ensuring the central bank’s hawkish monetary policy would continue longer than investors had hoped.
DIRE WARNINGS
Recession fears also echoed through dire warnings from Nike Inc and cruise operator Carnival Corp, both citing inflation-related margin pressures.
Shares of the companies tanked by 12.8 and 23.3 percent respectively.
The Dow Jones Industrial Average fell 500.1 points, or 1.71 percent, to 28,725.51, ending the week down 2.92 percent; the S&P 500 lost 54.85 points, or 1.51 percent, to 3,585.62, falling 2.91 percent for the week; and the NASDAQ Composite dropped 161.89 points, or 1.51 percent, to 10,575.62, ending the week down 2.69 percent.
Among the 11 major sectors of the S&P 500, real estate was the sole gainer, while utilities tech suffered the largest percentage losses.
Apple Inc, Microsoft Corp, Amazon.com and Nike weighed heaviest.
Corporate earnings reports for the quarter that ended with Friday’s closing bell would begin landing in a few weeks, and analyst expectations are trending downward.
Analysts now forecast annual S&P 500 earnings growth of 4.5 percent, on aggregate, down from the 11.1 percent estimate when the quarter began.
Quarter-end fund reallocations and so-called “window dressing” is likely contributed to the session’s volatility.
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