NEW YORK: Wall Street sank deeper into a bear market on Tuesday (Sept 27), with the S&P 500 recording its lowest close in almost two-years as Federal Reserve policymakers showed an appetite for more interest rate increases, even at the risk of throwing the economy into a downturn.
The benchmark S&P 500 is down about 24% from its record high close on Jan 3. Last week, the Fed signalled that high rates could last through 2023, and the index erased the last of its gains from a summer rally and recorded its lowest close since November 2020.
The S&P 500 has declined for six straight sessions, its longest losing streak since February 2020.
The S&P 500 touched a session low of 3,623.29, its lowest point on an intraday basis since Nov. 30, 2020. A late rally helped push the index off its worst level of the day, but the index still closed lower for a sixth straight session as it lost 7.75 points, or 0.21%, to 3,647.29 .
After the benchmark index fell more than 20% from its early January high to a low on June 16, which confirmed that the retreat was indeed a bear market, the S&P then rallied into mid-August before running out of gas.
That bear-market rally is now over.
The Dow Jones Industrial Average fell 0.43% to end at 29,134.99 points, while the S&P 500 lost 0.21% to 3,647.29.
The Nasdaq Composite climbed 0.25% to 10,829.50.
Seven of 11 S&P 500 sector indices fell, with utilities and consumer staples each down about 1.7% and leading declines.
The energy sector index rallied 1.2% after Sweden launched a probe into possible sabotage after major leaks in two Russian pipelines that spewed gas into the Baltic Sea.
Tesla gained 2.5% and Nvidia added 1.5%, with both companies helping keep Nasdaq in positive territory.
Traders exchanged over US$17 billion worth of Tesla shares, more than any other stock.
The benchmark US 10-year Treasury yield touched its highest level in more than 12 years amid the hawkish comments from Fed officials.
“As long as the Fed continues to raise rates, and investors don’t anticipate an end of the rate hikes, I think this market is going to continue to be weak,” said Tim Ghriskey, Senior Portfolio Strategist, Ingalls & Snyder, New York.
Speaking on Tuesday, St Louis Fed president James Bullard made a case for more rate increases, while Chicago Fed president Charles Evans said the central bank will need to raise rates by at least another percentage point this year.
“It’s disappointing, but it’s not a surprise,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “People are concerned about the Federal Reserve, the direction of interest rates, the health of the economy.”
Analysts at Wells Fargo now see the US central bank taking its target range for the Fed funds rate to between 4.75% and 5.00% by the first quarter of 2023.
Concerns about corporate profits taking a hit from soaring prices and a weaker economy have also roiled Wall Street in the past two weeks.
Analysts have cut their S&P 500 earnings expectations for the third and fourth quarters, as well as for the full year. For the third quarter, analysts now see S&P 500 earnings per share rising 4.6% year-over-year, compared with 11.1% growth expected at the start of July. – Reuters
Source: The Sun Daily
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