US stocks fall on recession fears, weak oil prices
Wall Street's main indexes fell on Wednesday, giving up modest initial gains, on growing concern about a recession in 2023 and surging COVID-19 cases in China, the world's top oil importer.
Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O) and Amazon.com Inc (AMZN.O) fell between 0.9% and 2.3% as the US 10-year Treasury yield recovered from a brief fall to rise for a third straight session.
Ten of the 11 S&P 500 (.SPX) sector indexes were lower. Energy stocks (.SPNY) were the biggest losers with a 1.9% drop as worries over demand in China weighed on oil prices.
Investors have been carefully assessing China’s move to reopen its COVID-battered economy against the backdrop of a surge in infections.
Tesla Inc (TSLA.O) rose 3% in choppy trade, after hitting its lowest level in more than two years in the previous session. The stock is down nearly 69% for the year.
The benchmark S&P 500 (.SPX) is down 20% year-to-date and set for its biggest annual loss since the financial crisis of 2008. The rout has been more severe for the tech-heavy Nasdaq Composite (.IXIC), down 34% for the same period.
“What’s happening today is modest continuation of those underlying dynamics, that the market is finally starting to take seriously will we have a recession 2023,” said Michael Green, chief strategist and portfolio manager at Simplify Asset Management in New York.
While recent data pointing to an easing in inflationary pressures has bolstered hopes of smaller rate hikes, a tight labor market and a resilient American economy have spurred worries that rates could stay higher for longer.
Markets are now pricing in 69% odds of a 25-basis point rate hike at the US central bank’s February meeting and see rates peaking at 4.94% in the first half of next year.
At 2:27 p.m. ET, the Dow Jones Industrial Average (.DJI) fell 222.54 points, or 0.67%, to 33,019.02, the S&P 500 (.SPX) lost 29.8 points, or 0.78%, at 3,799.45 and the Nasdaq Composite (.IXIC) dropped 102.49 points, or 0.99%, to 10,250.74.
Southwest Airlines Co (LUV.N) dropped 4.1% a day after the carrier came under fire from the US government for canceling thousands of flights.
Declining issues outnumbered advancing ones on the NYSE by a 3.34-to-1 ratio; on Nasdaq, a 1.81-to-1 ratio favored decliners.
The S&P 500 posted seven new 52-week highs and seven new lows; the Nasdaq Composite recorded 50 new highs and 378 new lows.
(Source: Reuters)
