4:15pm: Recession odds likely to rise, Deutsche Bank economist says
The Dow closed Wednesday down 269 points, 0.8%, at 32,911, the Nasdaq lost 89 points, 0.7%, to 12,086, while the S&P 500 declined 45 points, 1.1%, to 4,116.
The odds of a recession are likely to increase over the next few months, according to an analyst note from Deutsche Bank chief U.S. economist Matthew Luzzetti, who previously called for a recession by the end of 2023, as reported by CNBC.
Traders may have reacted to the bond market, as the 10-year Treasury yield jumped back above 3%.
One bright spot was Alibaba Group (NYSE:BABA) Holding Limited, which saw shares improve nearly 15% to $119.62.
12.05pm: Wall Street mixed at midday
US stocks were mixed at noon as choppy trading persists amid inflation concerns.
At midday, the tech-laden Nasdaq had clawed into positive territory up 35 points at 12,210 points.
The Dow had shed 62 points at 33,118 points and the S&P 500 was steady at 4,152 points.
CMC Markets UK chief market analyst Michael Hewson noted that US markets had opened lower, slipping back after two days of gains.
He said the return of US 10-year yields above 3% was weighing on sentiment against a bleak economic outlook painted by the OECD on the prospects for the global economy.
In terms of major movers, Roku Inc (NASDAQ:ROKU) shares had risen about 13% at noon following whispers that Netflix Inc (NASDAQ:NFLX) may be making a bid to buy out the company.
“The closure of the share trading portal for Roku employees has prompted speculation that something might be afoot,” Hewson said.
“With the share prices of the major streaming platforms under considerable pressure, the sector is ripe for consolidation, especially with the deeper pockets of the likes of Amazon and Disney in a much better position financially."
Netflix’s stock price had also jumped about 4% at noon.
Meanwhile, the rising oil price has pushed Exxon Mobile’s shares to a new record high price of just under $105 per share.
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9.35am: US stocks retreat
US stocks opened lower on Wednesday as rising recession fears crush investor confidence.
Just after the open, the Dow had dipped 211 points at 32,970 points.
The S&P 500 was down 25 points at 4,136 points and the Nasdaq had shed 49 points at 12,126 points.
Pharmaceutical company Novavax Inc’s shares were up about 6% following the news that its COVID-19 vaccine has been recommended for adult use by the US Food and Drug Administration’s vaccine advisory committee.
Chinese tech stocks including Alibaba Group (NYSE:BABA) Holding Limited were also boosted by the country’s approval of publishing licences for 60 videogames on Tuesday, signalling an easing of regulatory pressures for the broader Chinese tech sector.
Alibaba's US-listed shares were up about 4% just after the open.
6.30am: Retreat after rally
US markets were expected to open lower on Wednesday amid concerns that the world’s biggest economy may slide into a recession.
A spike in oil prices with benchmark oil prices jumping above $120 a barrel and a gloomy prediction for the global economy from the World Bank are also weighing on investors' minds.
Futures for the Dow Jones Industrial Average lost 0.5 % in pre-market trading, while those for the broader S&P 500 index shed 0.4%, and contracts for the Nasdaq-100 were down 0.3%.
Ipek Ozkardeskaya, senior analyst at Swissquote noted that high energy prices and the World Bank cutting its global growth forecast may weigh on sentiment and could rapidly reverse yesterday’s turnaround to gains by Wall Street.
“(The) World Bank cut its 2022 growth forecast for the second time this year, from 4.1% in January to 3.2% in April and to 2.9% this week on the back of several-years-long of above-average-inflation and below-average growth, that will especially hit low to middle-income economies,” she said.
The probability of a US recession is also growing, she noted, adding that: “Morgan Stanley, for example, recently said that the probability of recession in the US jumped from 5% to 35% since the start of the year.”
Meanwhile, the rally in oil prices looks here to stay, adding to overall inflationary pressures. In energy markets, WTI crude oil futures rose 1.5% to $121.15 a barrel and Brent crude futures gained 1.3% to $122.11
“The supply side is hard to fix in the short run, as even pumping more oil doesn’t necessarily mean that the refineries have the capacity to process enough oil to ease the supply crisis,” said Ozkardeskaya.
She noted that US oil inventory data, due today, will be closely watched by oil traders.
“While the oil inventories in the US fell sharply at last week’s data, adding to the positive pressure in oil prices, the API data this week hinted at a surprise 1.8-million-barrel build for this week’s data release,” she said. “ If that’s the case, we could see a short relief on oil prices, but the medium-term direction remains bullish, unfortunately."
US CPI inflation data, scheduled for release on Friday, will be key as markets look for signs that price pressures have already peaked.
Contact the author at jon.hopkins@proactiveinvestors.com