4.08pm: US markets suffer further losses
US markets suffered further losses today as uncertainty around the pace and direction of Federal Reserve rate hikes and further talk of a looming recession dented sentiment.
The S&P fell for a fourth day in a row, closing 58 points lower, or 1.44%, to 3,941, the Dow Jones Industrial Average slipped 351 points, or 1.03%, to 33,596 and the Nasdaq Composite dipped 225 points, or 2%, to 11,015.
Banking chiefs fanned recessionary concerns with Bank of America Corp (NYSE:BAC)'s chief executive predicting three quarters of mild negative growth in 2023, while JPMorgan Chase’s CEO Jamie Dimon said inflation will erode consumer spending power and that a mild to more pronounced recession was likely ahead.
Stocks on the move included Meta Platforms Inc (NASDAQ:FB) which slumped 6.8% following reports that European Union regulators have ruled the company should not require users to agree to personalized ads based on their digital activity.
Shares of Textron (NYSE:TXT) jumped 5% after the company won a US Army contract that could be worth $70 billion to provide next-generation helicopters.
But shares of media company Paramount slipped 7% after the CEO said it projected fourth-quarter advertising revenue to be lower than the third quarter.
12:06pm: Tech stocks lead widespread decline
At midday, the Dow was down 246 points, 0.7%, to 33,701, the Nasdaq Composite 167 points, 1.5%, to 11,074 and the S&P 500 shed 43 points, 1.1%, to 3,956.
The benchmarks have swooned since starting the session mixed. If things hold, Tuesday will be the fourth losing session in a row for the S&P 500.
“The recent pullback in global stocks has continued apace today, with tech stocks leading the decline thanks to a growing concern that inflation may be difficult to control as wages push higher," said Joshua Mahony, senior market analyst at online trading platform IG.
"Friday’s 0.6% monthly gain for average earnings did little to help sentiment, with traders fearing that the uptick in wages will ultimately lead to price increases for businesses. The fact that we have seen the Nasdaq lead the declines does serve to highlight the growing fears that this downturn in inflation may stutter to the detriment of interest rate expectations.”
9.35am: Stocks mixed as investors weigh up economic data
US stocks opened mixed Tuesday as investors weighed up the latest Institute for Supply Management (ISM) report and continued to speculate on the Fed’s next move.
Just after the market opened, the Dow Jones Industrial Average had added 40 points or 0.1% at 33,987 points, the S&P 500 was up 3 points or 0.1% at 4,001 points, while the Nasdaq Composite had shed 18 points or 0.2% at 11,221 points.
Forex.com market analyst Joshua Warner said US stocks had recovered some of the ground lost yesterday when it was revealed the US service sector had remained far more resilient than anticipated to suggest the economy remains strong despite the Federal Reserve’s efforts to combat inflation.
“The latest data points have thrown doubts over the pace of interest rate hikes and where the terminal rate will end and how long they will stay there,” he said.
“The Fed is widely expected to slow the pace of its hike to 50bps after four consecutive 75bps hikes when it makes its last decision of 2022 next week, although there are fears that they will need to ultimately climb higher than previously expected for the Fed to achieve its goals.”
Warner added that this was tempering any optimism coming from signs that China is slowly easing COVID-19 restrictions, as was news that the race for Georgia’s US Senate seat will go to a runoff and risk providing a majority in the upper chamber to either the Democrats or the Republicans.
“Markets [prefer] a split government that would prevent any radical changes or policies being pushed through,” he said.
6.30am: Market jittery after hot ISM data
Wall Street is expected to open mixed as the market continues to assess economic data after a strong Institute for Supply Management (ISM) report reinforced the case for higher interest rates as the US Federal Reserve tries to tame inflation.
Futures for the Dow Jones Industrial Average fell 0.1% in Tuesday pre-market trading, while those for the broader S&P 500 index shed 0.06% and the Nasdaq edged 0.04% higher.
The ISM reported that its non-manufacturing PMI increased to 56.5 in November, from 54.4 a month earlier, as business activity rose to an 11-month high and employment rebounded.
Coming on top of strong-than-expected non-farm payroll data on Friday, analysts said the data was likely to tip the Fed towards a higher rate path policy. Combined with some profit-taking after a strong run, this pushed equities lower.
At Monday’s close, the Dow was 1.4% down at 33,947, the S&P 1.8% to 3,999 and the Nasdaq declined 2% to 11,240.
“We’re very much in looking glass territory again with investors desperate for the Fed to ease up on rate hikes and therefore taking any bit of good news about the economy as bad news because it will delay the longed-for pivot,” said AJ Bell investment director Russ Mould.
Mould noted that the next key US releases come on Friday with producer prices data and a reading of consumer sentiment.
“Next Wednesday is decision day on US rates and the Fed’s actions could help set the tone for the tail end of 2022 and first weeks of 2023,” he added.