4:05pm: Dow hits 2022 low
US markets suffered heavy losses at the close, as the CBOE Volatility Index (^VIX) — Wall Street's "fear gauge" — rose above 30.
The S&P 500 lost 1.7% to finish at 3,693 points; the Nasdaq sank 1.8% to hit 10,868 points, and the Dow fell 1.6% to reach 29,590 points - a new 2022 low.
12.05pm: Dow Jones could hit new 22-month low
The major US indices were deeper into red territory at the noon bell, as hope for a vote of confidence by investors in the markets was disappointed.
At midday, the Dow Jones Industrial Average was down by 560 points or almost 2% to 29,516, the S&P 500 was down by 75 points at 3,681, while the Nasdaq Composite was down by 220 points at 10,846.
Chris Beauchamp, chief market analyst at online trading platform IG, said selling is intensifying across stocks.
“The Dow has pushed to a new 22-month low, if only just, in trading this afternoon, as the sea of red that has dominated for most of the week continued to flow over global markets. There is no sign of any dip buying, and instead, investors seem to be content to keep selling stocks as the global outlook worsens once again,” Beauchamp wrote in a note.
“With bond and FX markets under pressure too, this is turning into a disorderly rout, and no one seems to want to be left holding the bag,” he said.
The major movers included Domino’s Pizza, up by 3.5% on news that BMO upgraded the stock to Outperform and predicted a surge in pizza sales.
On the downside, the S&P saw APA Corp (US) down by over 11%, Marathon Oil down by 10.4%, Haliburton down by 10.3% and Schlumberger NV down by 9.2%. Market movers on the Dow Jones were all in the red, led by Boeing down by 5.7%, Chevron down by 5.6%, and Goldman Sachs (NYSE:GS) down by 4.5%.
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9.35am: Wall Street losses continue
US stocks continued to spiral down on Friday morning after central banks around the world locked in further interest rate hikes this week in a bid to curb four-decade-high inflation.
Just after the open, the Dow Jones Industrial Average had shed 294 points or 1% at 29,783 points, the S&P 500 slipped 43 points or 1.1% at 3,715 points, and the Nasdaq Composite had lost 115 points or 1% at 10,952 points.
After plummeting last week on the back of a grim profit warning, FedEx (NYSE:FDX) Corporation stock fell another 3% at the open as the transport company reported disappointing quarterly results and revealed price increases and cost-cutting measures after the bell yesterday.
Despite reporting quarterly results that exceeded analyst expectations, Costco (NASDAQ:NA:COST) Wholesale Corporation fell almost 2% as the retailer’s margin remains under pressure from supply chain challenges and rising costs.
Stocks are set to continue to struggle, according to Goldman Sachs (NYSE:GS) analysts who have cut their year-end 2022 target for the S&P 500 by 16% to 3,600 points from their previous target of 4,300 points.
In a note released late on Thursday, analysts wrote that the Fed’s expected path of interest rate hikes was higher than they previously thought.
Meanwhile, the US dollar has continued to gain momentum as foreign currencies have tumbled after the flurry of central bank meetings this week.
“The Fed raised rates by 75 basis points for the third time in a row and signalled that it would continue to hike rates aggressively until inflation comes back under control, a move that led to another upsurge in the dollar and yields,” noted Forex.com market analyst Fawad Razaqzada.
He added that there was no end in sight for the dollar’s rising trend, except perhaps if there was a coordinated action by a foreign government to stem the decline in their currency.
6.30am: Spreading gloom
US stocks are expected to fall on Friday as investors brace for a recession in the world’s biggest economy in the wake of the Federal Reserve’s steep interest rate hikes.
Futures for the Dow Jones Industrial Average were down 0.7% in pre-market trading, while those for the S&P 500 lost 0.8%, and contracts for the Nasdaq-100 were 1.0% lower.
US rate setters hiked interest rates by75 basis point (bp) on Wednesday and signaled that more hikes are likely as they try to cool inflation which remains near four-decade highs.
“The US Federal Reserve delivered its third 75bp hike. But the dot plot hinted at another jumbo hike before the year-end. We are ending the week with nearly 75% chance of a fourth 75bp hike in November,” said Ipek Ozkardeskaya, senior analyst at Swissquote bank.
The specter of rising interest rates and the pain that would cause the wider economy is spooking investors, who expect the economy to become stuck in a prolonged recession. There is also growing doubt whether raising interest rates so aggressively is the right path for the economy when inflationary pressures are being driven by supply interruptions rather than spiraling demand.
US Fed chairman Jerome Powell stressed on Wednesday that controlling inflation remains the main challenge.
“We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t,” Powell was quoted as saying. His words were a stark reminder that more interest rate increases are looming and that the hoped-for soft landing for the US economy may not materialize.
A string of interest rate increases across developed markets only served to underscore that message.
Central banks from Sweden to the UK and Switzerland raised interest rates this week as they scrambled to fight runaway inflation levels. Their actions are expected to weigh on global economic growth.
Powell has the chance to fine-tune his message at a speaking engagement at 2pm ET today and investors will be watching closely.
On the data front, services and manufacturing sector PMIs for September, due at 9.45am ET, will offer some indication of whether the spate of interest rate hikes is already affecting activity.
Contact the author at jon.hopkins@proactiveinvestors.com