4.07pm: US markets resume downward path
Wall Street’s three leading indices closed sharply lower on Thursday conceding Wednesday’s gains as stronger than expected GDP figures renewed concerns about rising interest rates while poor results from Micron Corp. knocked sentiment amongst tech stocks.
At the close the Dow was 348 points lower, or 1.04%, to 33,028, the S&P 500 was down 56 points, or 1.44%, at 3,823 and the Nasdaq Composite declined 233 points, or 2.18%, to 10,476.
Fawad Razaqzada, market analyst at City Index and FOREX.com said: ““Yesterday’s gains, gone. Sentiment, bearish. Once again, the market showed no upside follow-through. It is trapping the bulls. It appears as though Santa Rally is not happening this year.”
“Unsurprisingly, this current macro environment is not one you would associate with excessive risk-taking and that’s how it has proved once again.”
“The economic outlook is not going to change overnight, which means much of the issues we are facing right now could well be with us well into 2023.“
Stocks on the move included AMC Entertainment which fell 7.4% after the company announced a new US$110 million capital raise and a proposed reverse stock split that will require shareholder approval.
Tesla slipped 8.9% after it offered a US$7,500 discount on its Model 3 and Model Y vehicles delivered in the US by year-end, as well as 10,000 miles of free supercharging for those vehicles, according to its website.
While shares of the auto retailer Carmax shed 7.5% after its earnings and revenue for the recent quarter came in below Wall Street’s expectations.
12:25pm: Recession fears still loom
At midday, the Dow was down 505 points, 1.5%, to 32,872, the Nasdaq Composite fell 313 points, 2.9%, to 10,396 and the S&P 500 lost 79 points, 2%, to 3,800.
Wednesday's Santa rally has been wiped out. The fear among investors is that additional rate hikes from the Federal Reserve will send the economy into a recession.
Notably, we have seen US indices lead to push lower despite an upward revision to the US Q3 growth rate," said Joshua Mahony, senior market analyst at online trading platform IG. "This likely reflects the growing feeling of concern that the Federal Reserve will continue pushing rates upwards in the absence of any major economic distress signal."
9.35am: Short-lived Santa Rally already over
US stocks took a turn on Thursday morning as poor quarterly results from chipmaker Micron Technology soured the market mood.
This comes after all three major indexes added more than 1.5% on Wednesday, lifted temporarily by better-than-expected earnings from Nike and FedEx.
Just after the market opened, the Dow Jones Industrial Average had shed 307 points or 0.9% at 33,070 points, the S&P 500 was down 46 points or 1.2% at 3,833 points, and the Nasdaq Composite had lost 171 points or 1.6% at 10,540 points.
Micron Technology was down about 3% after it reported a wider-than-anticipated 2Q loss and revealed a range of cost-cutting measures designed to offset further revenue losses, including a 10% reduction in its workforce.
6.30am: Festive cheer?
US stocks look headed for a muted start on Thursday as the holidays come into view with a modest festive lift hoped for after some heartening economic data and company earnings.
Futures for the Dow Jones Industrial Average were down 0.1% in pre-market trading, while those for the broader S&P 500 index and the Nasdaq-100 also both eased 0.1%.
“Yesterday’s decidedly mixed economic data left pre-Christmas traders taking the glass half full view by all accounts,” noted James Hughes, chief market analyst at scopemarkets.com.
"Stocks rose for a second straight day on Wednesday, helped along by strong consumer confidence data for December which went some way to offset weak home sales numbers, building on the cheer still felt from decent earnings from the likes of FedEx and Nike.
“Housing sales have been clobbered by rising borrowing costs, although consumer confidence jumped by significantly more than had been expected, in what can only be seen as a more optimistic take when it comes to the longer term economic outlook,” added Hughes.
Today’s economic data are likely to pass by quietly as they mostly represent final readings on already released third-quarter figures, watering down their likely effect on the market, Hughes noted.
US third-quarter real gross domestic product and gross domestic income revisions are due at 8.30am ET on Thursday.
“Tomorrow’s income and spending readings both have the ability to offer more insight into how consumers are weathering the storm whilst the durable goods orders give the latest corporate view of life after the era of free money,” said Hughes.
For today, however, investors are hoping for a small festive run despite prevailing concerns about the outlook for the wider economy amid the prospect of pain from more interest rate increases from the Federal Reserve.
Contact the author at jon.hopkins@proactiveinvestors.com