The S&P 500 closed records on Friday with its sharpest September drop in two decades, crossing the finish line of a turbulent quarter fraught with historically high inflation, rising interest rates and recession fears.
All three major indices fell sharply, choking off short-term gains early in the session.
The S&P and Dow posted their third consecutive weekly decline, and all three indexes posted their second straight monthly losses.
In the first nine months of 2022, Wall Street experienced three consecutive quarterly declines, marking the longest losing streak for the S&P and Nasdaq since 2008 and the Dow’s longest quarterly decline in seven years.
“This is 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 that this year the Fed changed a total of 180 of its views on inflation and quickly became incredibly hawkish.”
The Federal Reserve shocked the markets by engaging in the most relentless series of rate hikes in decades to curb the stubbornly high inflation that is causing many market participants to watch key economic data for signs of a looming recession.
“The realization that the Fed is doing everything it can to fight inflation, which has reached a 40-year high, makes investors worry that they will push the economy to the brink and fall into a recession,” Detrick added.
The Commerce Department’s Personal Consumption Expenditure (PCE) report did little to allay those concerns, showing that while consumers continue to spend, the prices they pay have accelerated, deviating from the Fed’s inflation target and all but supporting the central government’s hawkish monetary policy. jar. will last longer than investors had hoped.
Recession fears were also reflected in dire warnings from Nike Inc (NKE.N) and cruise operator Carnival Corp (CCL.N), which cited inflation-related pressure on margins.
Shares of companies fell by 12.8% and 23.3%, respectively.
The Dow Jones Industrial Average (.DJI) fell 500.1 points, or 1.71%, to 28,725.51; S&P 500 (.SPX) lost 54.85 points, or 1.51%, to 3585.62; and the Nasdaq Composite (.IXIC) fell 161.89 points, or 1.51%, to 10,575.62.
Among the 11 major S&P 500 sectors, real estate (.SPLRCR) was the sole gainer, while utilities (.SPLRCU) and technology (.SPLRCT) suffered the largest percentage loss.
Apple Inc (AAPL.O), Microsoft Corp, Amazon.com and Nike were in the top weight.
Corporate earnings reports for the quarter ending Friday will start coming in in a few weeks, and analyst expectations are trending down.
Analysts are now forecasting a 4.5% annual gain for the S&P 500 as a whole, up from an estimate of 11.1% at the start of the quarter.
The reallocation of funds at the end of the quarter and the so-called “window dressing” probably contributed to the volatility of the session.
There were more declining issues on the NYSE than rising issues at a ratio of 1.45 to 1; on the Nasdaq, a ratio of 1.38 to 1 favored the decline.
The S&P 500 made no new 52-week highs and 93 new lows; The Nasdaq Composite recorded 27 new highs and 380 new lows.
Volume on US exchanges was 12.44 billion shares, compared to an average of 11.45 billion over the past 20 trading days.