Thursday, September 29 2022
  • Dow drops more than 1,000 points
  • Nasdaq closes at lowest level since November 30, 2020
  • Traders bet on a 75 basis point rate hike in June
  • Twitter one of the few titles in positive territory
  • The indices fall: Dow 3.12%, S&P 3.56%, Nasdaq 4.99%

May 5 (Reuters) – U.S. stocks closed sharply lower on Thursday amid a sell-off as investor sentiment slumped amid fears that the Federal Reserve’s interest rate hike the previous day could not enough to control the surge in inflation.

Wall Street’s three major benchmarks erased gains made in a relief rally on Wednesday, with the Nasdaq posting its biggest one-day percentage decline since June 2020 and its lowest since November 2020.

The Dow Jones decline was its worst daily performance since October 2020.

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Tech megacaps have collapsed. Google-parent Alphabet Inc (GOOGL.O), Apple Inc (AAPL.O), Microsoft Corp (MSFT.O), Meta Platforms (FB.O), Tesla Inc (TSLA.O), and (AMZN.O) ) all fell between 4.3% and 8.3%.

However, it’s not just high-growth stocks that have struggled in 2022, as the prospect of rising rates has caused investors to question their future earnings potential. The selling affected all sectors of the market, as traders headed for the exits.

“Investors aren’t looking at fundamentals (such as earnings) right now, and it’s more about sentiment,” said Megan Horneman, chief investment officer at Verdence Capital Advisors.

The U.S. central bank on Wednesday raised interest rates by half a percentage point as expected and Fed Chairman Jerome Powell explicitly ruled out a 75 basis point hike at an upcoming meeting.

Traders, however, raised their bets on Thursday to a 75 basis point rise at the Fed’s June meeting. IRPR

Concerns over Fed policy actions, mixed earnings at some large growth companies, conflict in Ukraine and pandemic-related lockdowns in China have hammered Wall Street recently, overshadowing a better-than-expected quarterly reporting season.

The Dow Jones Industrial Average (.DJI) fell 1,063.09 points, or 3.12%, to 32,997.97, the S&P 500 (.SPX) lost 153.3 points, or 3.56%, at 4,146.87 and the Nasdaq Composite (.IXIC) fell 647.17 points, or 4.99%, to 12,317.69.

Only 19 of the S&P 500 constituents closed in positive territory, including Twitter Inc (TWTR.N), which ended up 2.6%.

Elon Musk revealed on Thursday that Oracle co-founder Larry Ellison and Sequoia Capital were among the investors backing his takeover of the social media giant with $7.14 billion in funding. Read more

All of the 11 major S&P sectors fell, with Consumer Discretionary (.SPLRCD) leading the way with a 5.8% decline. The index was led by Etsy Inc (ETSY.O) and eBay Inc (EBAY.O), down 16.8% and 11.7% respectively, after both Q2 revenue forecasts fell below estimates of Wall Street.

The technology sector (.SPLRCT) was the second biggest loser, down 4.9%, with Intuit Inc (INTU.O) among the heaviest. It slid 8.5%, to its lowest level in a year, a day after agreeing to pay a $141 million settlement centered on allegations of deception around its TurboTax product. Read more

“You see these areas of the market that are purely discretionary, those are the ones that are being hit today because everyone expects it to be a tough time for consumers over the next few quarters,” Horneman said. of Verdence Capital Advisors. .

The CBOE Volatility Index (.VIX), also known as the Wall Street Fear Gauge, climbed to 31.20 points.

Attention now turns to the closely watched U.S. Labor Department’s monthly jobs report on Friday for clues about the strength of the labor market and its impact on monetary policy.

Volume on U.S. exchanges was 13.45 billion shares, compared to an average of 12.01 billion for the full session over the past 20 trading days.

The S&P 500 posted two new 52-week highs and 43 new lows; the Nasdaq Composite recorded 20 new highs and 446 new lows.

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Reporting by Devik Jain and Medha Singh in Bengaluru and David French in New York; Editing by Shounak Dasgupta, Sriraj kalluvila and Cynthia Osterman

Our standards: The Thomson Reuters Trust Principles.


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