Wall Street falls fourth straight day as recession worries nag

Dec 19 (Reuters) – Wall Street stocks closed lower on Monday for a fourth straight session, with the Nasdaq leading the declines as investors shun riskier bets amid fears the Federal Reserve’s tightening campaign could take a dive the US economy in a recession.

The three major U.S. stock indexes have been under pressure since Wednesday, when Fed Chairman Jerome Powell sounded hawkish when the central bank raised interest rates. Powell promised further increases even as weak data showed signs of a weakening economy.

The S&P 500 (.SPX)Dow Jones Industrialists (.DJI) and the Nasdaq sold off sharply in December and are on track for their biggest annual declines since the 2008 financial crisis.

According to Brian Overby, senior market strategist at Ally, US Treasury yields rose as investors braced for a possible recession in 2023, abandoning equities for safer options.

“Investors are asking why do I want to take these risks in 2023 when the Fed’s stance is still aggressive when I can get such a good return in the fixed income market,” Overby said.

The absence of big earnings reports or economic data on Monday sharpened investors’ attention to economic fears and interest rates, according to Melissa Brown, global head of applied research at Qontigo in New York.

“It’s a knife’s edge between whether we’re going to tip into a recession or have a soft landing. Is the Fed acting appropriately?” said Brown who also noted that the moves may be overdone as many investors take vacations around the year-end holidays.

“Investors haven’t necessarily changed their minds overall, but those that have are leading the market right now and driving larger changes in stock prices due to low trading volume,” she said.

According to preliminary data, the S&P 500 (.SPX) fell 35.20 points, or 0.91%, to end at 3,817.16 points, while the Nasdaq Composite (.IXIC) lost 156.66 points, or 1.46%, to 10,548.75. The Dow Jones Industrial Average (.DJI) fell 161.48 points, or 0.49%, to 32,758.98.

Large sectors in decline include communication services (.SPLRCL)Technology (.SPLRCT) and consumer discretionary (.SPLRCD) while the energy (.SPNY) outperformed.

Market heavyweights like Apple Inc (AAPL.O)Microsoft Corporation (MSFT.O) and Amazon.com Inc. (AMZN.O) created some of the biggest drags on the market.

Tesla Inc Trading (TSLA.O) was volatile, with the electric car maker falling 2.8% in the session following a Twitter poll that showed a majority of respondents wanted Tesla chief executive Elon Musk is stepping down as CEO of the social media platform.

Metaplatforms (META.O) Shares fell after the European Commission said it could impose a fine of up to 10% of the tech conglomerate’s annual global turnover if evidence showed a breach of EU antitrust laws.

L3Harris Technologies Inc (LHX.N) lost ground after the US defense contractor said it would buy hypersonic engine maker Aerojet Rocketdyne Holdings Inc (AJRD.N) for $4.7 billion. Aerojet gained ground.

Shares of casino operators Melco Resorts & Entertainment, Las Vegas Sands Corp (LVS.N) and Wynn Resorts (WYNN.O) fell after Macau announced on Friday that six casino companies would invest around $15 billion under new 10-year contracts they signed to operate in the world’s largest gambling center.

Reporting by Sinéad Carew, Sruthi Shankar, Shubham Batra, Johann M Cherian and Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty, Maju Samuel and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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