4:15pm: Nasdaq Composite suffers worst week since June
The Dow closed Friday down 140 points, 0.5%, at 30,822, the Nasdaq Composite dropped 104 points, 0.9%, to 11,448 and the S&P 500 lost 28 points, 0.7%, to 3,873.
The benchmarks have each fallen for four of the last five weeks. For the Nasdaq Composite, it was the worst week since June. Things got better as the afternoon went on, but the session couldn't be salvaged after FedEx (NYSE:FDX) reported the closing of 90 offices and forecast a global recession. Shares of the shipping giant fell 21%.
“There is a lot of nervousness about how the global economy can affect the US economy now, while the US economy is dealing with its own set of very serious issues. I think that dynamic is what people have woken up to,” said Callie Cox, US investment analyst at eToro, as reported by CNBC.
12.05pm: Wall Street anticipating huge rate hike
US indices continued to slide at midday, as Wall Street contemplated how US monetary policy – including a potential third interest rate hike of 100 basis points – meshes with the world economy.
At midday, the Dow Jones Industrial Average was down by 0.9% to 30,678 points, the S&P 500 was down by 1.15% at 3,858 points, while the Nasdaq Composite was down by 1.4% at 11,392 points.
Chris Beauchamp, chief market analyst at online trading platform IG, said equities have fallen again, thanks to a string of warnings about the global economy.
“There has been no end to the bearish moves of the past few days, with the final session in the red following a trio of warnings about the global economy," Beauchamp said in a statement. “The IMF, the World Bank and FedEx (NYSE:FDX) have all given investors reason to worry, and investors have opted to continue their flight from equities.”
He added: “Given that the Fed is expected to renew its pledge of tighter policy next week, and inflation shows no sign of slowing, these warnings may actually be on the optimistic side, suggesting the actual outcome for global markets may be worse.”
The major movers included gold producer Newmont, up by 2.7%, while First Energy was up by 1.8% and homebuilder Lennar (NYSE:LEN) rose by 1.7%.
On the downside, FedEx (NYSE:FDX) shares sank by 23% on news of weaker global volume of shipments, causing the company to close 90 offices, defer hiring and forecast a global recession.
The S&P 500 was also weighed down by a trio of paper and packing companies – Packaging Corporation of America, International Paper and Westrock – which were all down by over 11%.
11.50am: Proactive North America headlines:
Uber investigates reported cybersecurity incident on Slack
Adobe signs US$20bln deal to acquire cloud-based designer platform start-up Figma
Sigma Lithium adds veteran finance executive Dana Perlman to its board of directors
Infinity Stone Ventures identifies new high-grade copper zone at Zen-Whoberi project in Quebec
Spanish Mountain Gold continues to advance its BC project; mobilizes staff for Fall field program
Forte Minerals appoints mining industry veterans Ricardo Labó and Peter Espig to its advisory committee
American Resources Corporation (NASDAQ:AREC) to build lithium ion battery and rare earth magnets recycling facility
Todos Medical announces NFL Hall of Famer Michael Irvin as Tollovid Sports Ambassador for #TolloUp campaign
Revive Therapeutics says Phase I/II psilocybin clinical study for methamphetamine use disorder will inform late-stage trials of film strip product
Nextech AR announces platform and listing updates on IPO spin-off ARway
First Mining Gold completes acquisition of Duparquet Gold Project in Quebec
SWMBRD Sports announces successful testing of factory boards
9.35am: Sell-off continues
US stocks continued to tumble on Friday as investors turn their attention to next week, which is packed with central bank meetings, including the Federal Reserve’s meeting on Wednesday where it is expected the central bank will hike interest rates by another 75 basis points (bp).
Just after the open, the Dow Jones Industrial Average had shed 346 points or 1.1% at 30,615 points, the S&P 500 dipped 45 points or 11% at 3,856 points, and the Nasdaq Composite dropped by 164 points or 1.4% at 11,388 points.
FedEx (NYSE:FDX) stock tumbled more than 23% at the open after the transport company reported disappointing fiscal first-quarter results and withdrew its full-year earnings forecast late on Thursday.
ING analysts wrote in a note on Friday that they continued to favor a 75bp interest rate hike by the Fed next week but noted that the higher-than-expected August CPI report had seen the market price in a 20% chance of a 100bp increase.
“We acknowledge the risk that with inflation proving to be stickier than we had suspected, the subsequent meetings in November and December could see more aggressive action from the Fed than we are currently pencilling in,” they wrote.
“While the geopolitical backdrop, the China slowdown story, the potential for energy rationing in Europe, the strong dollar and fragile-looking domestic equity and housing markets argue for a more moderate path of tightening in the coming months, if inflation momentum doesn’t slow the bank will hike by a further 75bp in November and possibly 50bp in December.”
6.30am: Another seesaw session
US stocks were poised to open lower on Friday as investors fix their focus firmly on the Federal Reserve’s rate-setting meeting next week after a mixed bag of economic data this week that included stubbornly-high consumer prices for August.
Futures for the Dow Jones Industrial Average were trading 0.9% lower pre-market, while those for the broader S&P 500 index were down 1.0%. and futures for the tech-laden Nasdaq-100 lost 1.2%.
The Federal Open Market Committee will meet on September 20-21, when it is expected to raise interest rates by 75 basis points, matching the moves it made in June and July, to bring down the inflation rate which is running at 40-year highs.
Traders had expected recession fears to soften the Fed's aggressive approach to runaway inflation but persistent price pressures, as seen in August’s sharp gains from the prior month, are putting policymakers in a tough spot.
“The fact that US retail sales, and last week’s jobless claims - which both hinted that the US economy remains relatively resilient to the Federal Reserve’s rate hikes - didn’t help keep the Fed hawks at bay … we will likely close this week on a sour note,” said Swissquote Bank senior analyst Ipek Ozkardeskaya.
On Thursday, data showed US retail sales rose unexpectedly by 0.3% month-over-month in August, following a revised 0.4% fall in July and beating forecasts of a flat reading as Americans continued to spend on food and beverage, cars, clothing and sporting goods, amongst others.
Today traders await the latest US consumer sentiment data, due out at 10.00am ET, for more clues as to what’s in store.
Meanwhile, US President Joe Biden’s last-minute labor agreement to improve rail workers’ pay and working conditions to avert a national railway strike, announced early Thursday, went unnoticed by equity market traders, Ozkardeskaya noted.
The strike would have caused a major disruption to the flow of key goods and commodities around the US, estimated at $2 billion per day, and scuttling the nascent recovery in supply chain disruptions triggered by the COVID-19 pandemic.
“Avoiding a rail strike is good news, but not good enough to give a smile to investors. The markets remain too focused on inflation,” Ozkardeskaya said.
The tentative rail deal includes a 7% pay hike this year, as well as retroactive increases for the previous two years, with two more increases in 2023 and 2024 of 4% and 4.5%, respectively. On top of these, there will be an annual $1,000 ‘service recognition bonus’.
Contact the author at jon.hopkins@proactiveinvestors.com