4.10pm: S&P 500, Dow and Nasdaq all have losing weeks
US indices dropped for a third straight session for a second straight week of losses as fears continued to grow that the Federal Reserve's campaign to arrest inflation would send the economy into a recession.
At 4pm, the S&P 500 was below 50-day moving average for the first time since November 9, finishing at 3,852 points for a 1.1% loss, while the Dow closed 0.9% lower at 32,920 and the Nasdaq lost 1% at 10,705.
With just one week left until Christmas, a festive rally seems a dim prospect, says Chris Beauchamp, chief market analyst at online trading platform IG.
“If there is going to be a Santa rally then investors need to think very hard over the weekend about where to find it, since at the moment sentiment points towards a very Scrooge-like Christmas," Beauchamp noted.
"Central banks have sent a clear message (again) this week to equities, telling them that they are very much on their own, and that there is no jolly fat man in a red suit turning up to hand out presents. At this point, traders might settle for Jerome Powell handing out an orange or two, but even this seems too much to hope for.”
12.05pm: Wall Street on pace for back-to-back losing weeks
US stocks declined sharply in noon trading as S&P Global's services Purchasing Managers' Index (PMI) fell to a four-month low, while its manufacturing index hit a 31-month low in December, suggesting business conditions are worsening as the year comes to a close.
At midday, the Dow lost 458 points to 32,744, while the S&P 500 eased 60 points at 3,836 and the tech-heavy Nasdaq slipped 154 points to 10,656.
“After gouging themselves on hopes for a Fed pivot, equity traders are experiencing indigestion from [Wednesday’s] FOMC statement, which reiterated Jerome Powell’s theme of higher for longer,” Comerica (NYSE:CMA) Wealth Management chief investment officer John Lynch said.
Notable movers included shares of Meta Platforms Inc (NASDAQ:FB), which rose more than 4% after JPMorgan upgraded shares of the social media company to ‘Overweight’ from ‘Neutral’.
9.35am: Risk-off theme dominates markets
US stocks continued their slide on Friday, as recent interest rate hikes around the world have signalled that restrictive monetary policies are going to remain in place for longer than investors had hoped.
Just after the market opened, the Dow had shed 386 points or 1.1% at 32,848 points, the S&P 500 was down 41 points or 1.1% at 3,856 points, and the Nasdaq Composite had slipped 67 points or 0.6% at 11,280 points.
Forex.com market analyst Fawad Razaqzada said risk-off remained a dominant theme, with the safe-haven US dollar also rising.
He said, in a nutshell, it was all about fears over a sharper economic slowdown in 2023 than previously expected.
“While macro data have been weak of late, there was still hope that the downturn might be short-lived and that a recession might be avoided in some regions altogether, amid signs of inflation peaking in some regions like the US,” he said.
“However, the market has questioned that view after central banks from two of the world’s largest trading blocs signalled that their restrictive monetary policies are going to remain in place for longer than expected.”
6.30am: Little cheer as Santa rally prospects disappear
Wall Street is expected to open lower after weaker-than-expected US retail sales data on Thursday provided little cheer for a market still reeling from the prospect of interest rates rising into 2024 after this week's Federal Reserve policy decision statement.
Futures for the Dow Jones Industrial Average (DJIA) fell 1.0% in Friday pre-market trading, while those for the broader S&P 500 index declined 1.1% and contracts for the Nasdaq-100 shed 0.8%.
“Recessionary fears raced back to the top of the agenda, as global central banks continued the policy of relentless interest rate hikes,” commented Richard Hunter, head of markets at interactive investor.
“Any thoughts of a Santa rally have all but evaporated, with previous hopes of peak inflation and interest rates being soundly rejected," he added.
The DJIA had its worst day in three months on Thursday as weak retail sales figures increased worries that the Federal Reserve’s pursuit of lower inflation through higher interest rates would result in recession. Retail sales declined 0.6% in November, well ahead of Street expectations for a 0.3% decline.
The US blue-chip index sank 2.3% to 33,202 on Thursday, while the S&P 500 slumped 2.5% to 3,896 and the Nasdaq Composite tumbled 3.2% to 10,811.
“US markets endured a torrid session,” Hunter continued. “The darkening outlook for investors was underlined as the latest retail sales figure declined by more than expected in November, just ahead of the crucial festive season. With the US consumer being the major driver of economic growth, a slowdown at this time of year, in particular, could signal that the tightening rhetoric is beginning to filter through.”