Wall Street Ends Down With Investors Fretting Over Economy

On Thursday, Wall Street ended sharply lower over concerns that the US economy would be hobbled due to the aggressive monetary policy tightening by the Federal Reserve.

In addition, investors were also fretting about a rout in global debt and currency markets.

The indexes

The Nasdaq Composite index fell close to its lowest level recorded this year in mid-June because tech heavyweights like Nvidia Corp and Apple Inc. both declined by more than 4% for the day.

As for the S&P 500 index, it ended the day down to lows that it had last reached in November 2020. The benchmark has lost more than 8% in September.

This puts it on course for the worst September that it has seen since 2008. The sell-off in the US bond market resumed once more.

It was in light of no indications from the Fed officials that they intended to change or moderate the plans of the US central bank in terms of hiking interest rates for combating inflation.

Loretta Mester, the President of the Cleveland Fed, said that the central bank’s campaign to reduce inflation in rate hikes was likely to continue because the US financial markets do not show any signs of distress.

The Fed funds rate has now climbed from 3.0% to 3.25%.

Economic data

Even though the Fed has been hiking the interest rates rather aggressively, data showed that there was a decline in the number of Americans who filed new claims for unemployment benefits last week to a five-month low.

This shows that the labor market is still quite robust and it would support the case of the Fed hiking the interest rates more.

Market analysts said that the good news was also bad news because the job numbers show that the US central bank needs to continue with its aggressive stance.

They added that markets have become fearful of the Fed driving the economy into a deep recession, which would result in an earnings recession and this led to the sell-off.

More details

Tesla Inc.’s stock was the most traded in the S&P 500, as the value of shares exchanged during Thursday’s session was about $20.8 billion. There was a 6.8% decline recorded in the shares.

Treasures are usually regarded as risk-free as long as they are held to maturity and many of them saw their yields rise to dwarf the dividend yield of the S&P 500, which was around 1.8%.

There was a 2.11% drop in the S&P 500 for the session and it ended at 3,640.47 points. A 2.84% decline in the Nasdaq Composite brought it to 10,737.51 points.

The Dow Jones Industrial Average, it dropped 1.54% to reach 29,225.61 points. There was also a decline in all 11 major sectors of the S&P 500 index.

Utilities saw the biggest drop of 4.06% and then consumer discretionary stocks also lost 3.37%. A 3.7% loss was also recorded in Meta Platforms.

This was after a Bloomberg report stating that the Facebook owner had imposed a hiring freeze and warned of downsizing.