NEW YORK, Sept 30 (Reuters) – The S&P 500 closed its steepest September drop in two decades on Friday, crossing the finish line of a tumultuous quarter plagued by record-high inflation, rising interest rates and recession fears.
All three major indices veered to a steep lower end, having stifled a brief rally earlier in the session.
The S&P and Dow posted their third consecutive weekly declines, with all three indices posting their second consecutive monthly losses.
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In the first nine months of 2022, Wall Street suffered three straight quarterly declines, the longest losing streak for the S&P and Nasdaq since 2008 and the Dow’s longest quarterly decline in seven years.
“It’s another ugly day to end an ugly quarter in what looks 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 full 180 on its views on inflation and quickly became incredibly aggressive.”
The 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 an impending recession.
“The realization that the Fed is doing everything it can to combat the highest inflation in 40 years has investors worried that they will push the economy over the edge and into a recession,” Detrick added.
The Commerce Department’s Personal Consumption Expenditures (PCE) report did little to allay those fears, showing that while consumers continue to spend, the prices they are paying have accelerated, moving beyond the target. of inflation from the Fed and almost assuring the aggressive monetary policy of the central bank. it will continue for longer than investors expected.
Recession fears were also echoed through dire warnings from Nike Inc. (NKE.N) and cruise operator Carnival Corp. (CCL.N)both citing inflation-related margin pressures. read more read more
Shares of the companies sank 12.8% and 23.3%, respectively.
The Dow Jones Industrial Average (.DJI) it fell 500.1 points, or 1.71%, to 28,725.51; the S&P 500 (.SPX) it lost 54.85 points, or 1.51%, to 3,585.62; and the Nasdaq Composite (.IXIC) it fell 161.89 points, or 1.51%, to 10,575.62.
Among the top 11 sectors in the S&P 500, real estate (.SPLRCR) was the sole winner, while utilities (.SPLRCU) technology (.SPLRCT) suffered the highest percentage of losses.
Apple Inc. (AAPL.O)Microsoft Corp, Amazon.com and Nike weighed more.
Corporate earnings reports for the quarter ending with the closing bell on Friday are due to start coming in a few weeks, and analyst expectations are trending lower.
Analysts now see annual earnings growth for the S&P 500 at 4.5%, as a whole, down from the 11.1% estimated when the quarter began.
The reallocation of funds at the end of the quarter and the so-called “window decoration” are likely to contribute to the volatility of the session.
Down issues outnumbered up ones on the New York Stock Exchange by a ratio of 1.45 to 1; on Nasdaq, a ratio of 1.38 to 1 favored decliners.
The S&P 500 failed to post new 52-week highs and 93 new lows; The Nasdaq Composite posted 27 new highs and 380 new lows.
Volume on US stocks was 12.44 billion shares, compared with the average of 11.45 billion over the past 20 trading days.
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Information from Stephen Culp; Additional reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru; Edited by Jonathan Oatis
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