(Sept 29): Wall Street tumbled on Thursday on worries of a global economic downturn from aggressive central bank policy and fears that a rout in global currency and debt markets could spillover to stocks.
The Nasdaq fell 3% due to losses in megacap growth names such as Amazon.com Inc, Apple Inc, Microsoft Corp, Meta Platforms Inc and Tesla Inc. They were down between 3.09% and 6.25%.
The S&P 500 slipped to its lowest level since November 30, 2020, and was now set for a monthly decline of nearly 8%.
The benchmark index had recorded its first gain in seven sessions on Wednesday on easing Treasury yields after the Bank of England said it would buy long-dated British bonds to restore financial stability in markets.
However, the relief was short-lived as Sterling fell and bond prices slid on Thursday, with the selloff in assets spilling over to even safe-haven US Treasuries and top-rated German bonds.
The S&P 500 index has lost about US$9.1 trillion in market value this year and was last valued at US$31.2 trillion, according to Datastream.
“There’s so many huge macro issues right now that are just terrifying for equity investors who typically want to look at fundamentals of companies,” said David Russell, vice president of Market Intelligence at TradeStation Group.
“So, it’s kind of like trying to go outside and do your gardening when there’s a hurricane coming.”
The yields on many Treasuries, which are considered virtually risk-free if held to maturity, now dwarf the S&P 500’s dividend yield, which recently stood at about 1.8%, according to Refinitiv Datastream.
Meanwhile, comments from the Federal Reserve’s Cleveland President Loretta Mester echoed other central bank officials through the week, who have vowed more interest rate hikes to tame inflation.
At 12.23pm ET, the Dow Jones Industrial Average was down 457.43 points, or 1.54%, at 29,226.31, the S&P 500 was down 79.82 points, or 2.15%, at 3,639.22, and the Nasdaq Composite was down 336.57 points, or 3.05%, at 10,715.07.
All of the 11 S&P 500 sector indexes were down between 1% to 3%, with consumer discretionary leading the slide as automobile stocks slumped.
CarMax Inc slumped 23.72% after the used-car retailer missed expectations for second-quarter results, hurt by consumers cutting spending amid inflation, rising interest rates and higher car prices.
General Motors Co and Ford Motor Co also took a hit, dropping about 5.5% each.
Airline carriers and cruise operators fell on cancelling or delaying trips after Hurricane Ian hit Florida’s Gulf Coast with catastrophic force.
American Airlines fell 4.3%, while United Airlines Holdings, Southwest Airlines and Delta Air Lines fell between 2.3% and 3.9%.
Cruise companies Norwegian Cruise Line Holdings Ltd and Carnival Corp fell 4.3% and 5.7%, respectively.
Declining issues outnumbered advancers for a 7.26-to-1 ratio on the NYSE and for a 3.87-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week high and 85 new lows, while the Nasdaq recorded six new highs and 393 new lows.
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