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Wall Street closed slightly lower on Wednesday in a choppy session of trading. The fear of a recession continued to influence trading as investors grappled to price in an imminent economic downturn. Two of the three major indexes ended in the red, while one closed flat.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) closed flat at 33,597.92 points. Fifteen components of the 30-stock index ended in negative territory, while 15 ended in the positive.
The S&P 500 lost 0.2% or 7.34 points to close at 3,933.92 points. Eight of the 11 broad sectors of the benchmark index ended in negative territory. The Consumer Discretionary Select Sector SPDR (XLY), the Communication Services Select Sector SPDR (XLC) and the Technology Select Sector SPDR (XLK) decreased 0.6%, 0.5% and 0.5%, respectively, while the Health Care Select Sector SPDR (XLV) advanced 0.8%.
The tech-heavy Nasdaq dipped 0.5% or 56.34 points to finish at 10,958.55 points.
The fear-gauge CBOE Volatility Index (VIX) increased 2.3% to 22.68. A total of 10.3 billion shares were traded on Wednesday, lower than the last 20-session average of 11 billion. The S&P 500 recorded seven new 52-week highs and seven new lows, while the Nasdaq posted 61 new highs and 307 new lows.
Investors Worried About Extended Hike Cycle
Trading in recent sessions has been dominated by what to expect from the Fed and whether the holiday season market would get a boost, at least in terms of hawkish signals from the central bank. However, with recent economic data showing resilience across sectors, investors have become apprehensive that the Fed would not be back-tracking on its policy of incremental rate hikes just yet. In fact, these economic indicators might just push the Fed to infer that it has not done enough to bring down inflation.
Usually, strong economic data is good news market. But we are living in times when a thriving job market and services sector entail that the Fed’s policy of slowing down the economy is not up to the level of its liking. Major financial houses have noted that financial indicators are pointing to a recession on the horizon.
Bets are on the Fed raising rates by 50 basis points at its Dec 13-14 policy meeting and continuation of hikes well into next year. Earlier, market participants had expected the Fed to take a pause around the first quarter of 2023. A longer hike cycle is currently getting priced into the market. Growth stocks have suffered the most in the last few sessions, with a downturn looming large, and currently look overvalued. However, Wall Street managed to recover some of its losses on Wednesday, with bond yields falling. The 10-year Treasury Note at one point hit as low as 3.402%. Consumer Discretionaries and travel-related stocks were generally down.
Oil prices fell to their lowest level this year on Wednesday, wiping out all of the gains made since Russia's invasion of Ukraine. Far removed from the March high of $140/barrel, crude prices fell on Wednesday as a report emerged on a bigger-than-expected fuel inventory in the United States.
Brent crude fell $2.18, or 2.8%, to $77.17/barrel, ending below the year's previous closing low of $78.98/barrel on Jan 1. WTI crude fell by $2.24, declining further from the previous day’s yearly low to $72.01/barrel. This is the fifth straight session that oil prices have fallen and have been a major drag on the stock market
Economic Data
The Fed reported that Consumer Credit for October increased by $27 billion in October, while the same for September was revised up to $25.9 billion.
According to a weekly government report, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 5.2 million barrels from the previous week. At 413.9 million barrels, crude inventories are 9% below the five-year average for this period.
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Stock Market News for Dec 8, 2022
Wall Street closed slightly lower on Wednesday in a choppy session of trading. The fear of a recession continued to influence trading as investors grappled to price in an imminent economic downturn. Two of the three major indexes ended in the red, while one closed flat.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) closed flat at 33,597.92 points. Fifteen components of the 30-stock index ended in negative territory, while 15 ended in the positive.
The S&P 500 lost 0.2% or 7.34 points to close at 3,933.92 points. Eight of the 11 broad sectors of the benchmark index ended in negative territory. The Consumer Discretionary Select Sector SPDR (XLY), the Communication Services Select Sector SPDR (XLC) and the Technology Select Sector SPDR (XLK) decreased 0.6%, 0.5% and 0.5%, respectively, while the Health Care Select Sector SPDR (XLV) advanced 0.8%.
The tech-heavy Nasdaq dipped 0.5% or 56.34 points to finish at 10,958.55 points.
The fear-gauge CBOE Volatility Index (VIX) increased 2.3% to 22.68. A total of 10.3 billion shares were traded on Wednesday, lower than the last 20-session average of 11 billion. The S&P 500 recorded seven new 52-week highs and seven new lows, while the Nasdaq posted 61 new highs and 307 new lows.
Investors Worried About Extended Hike Cycle
Trading in recent sessions has been dominated by what to expect from the Fed and whether the holiday season market would get a boost, at least in terms of hawkish signals from the central bank. However, with recent economic data showing resilience across sectors, investors have become apprehensive that the Fed would not be back-tracking on its policy of incremental rate hikes just yet. In fact, these economic indicators might just push the Fed to infer that it has not done enough to bring down inflation.
Usually, strong economic data is good news market. But we are living in times when a thriving job market and services sector entail that the Fed’s policy of slowing down the economy is not up to the level of its liking. Major financial houses have noted that financial indicators are pointing to a recession on the horizon.
Bets are on the Fed raising rates by 50 basis points at its Dec 13-14 policy meeting and continuation of hikes well into next year. Earlier, market participants had expected the Fed to take a pause around the first quarter of 2023. A longer hike cycle is currently getting priced into the market. Growth stocks have suffered the most in the last few sessions, with a downturn looming large, and currently look overvalued. However, Wall Street managed to recover some of its losses on Wednesday, with bond yields falling. The 10-year Treasury Note at one point hit as low as 3.402%. Consumer Discretionaries and travel-related stocks were generally down.
Consequently, shares of Delta Air Lines, Inc. (DAL - Free Report) and Carnival Corporation & plc (CCL - Free Report) slid 4.4% each. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here
Oil Prices Hit 2022 Low
Oil prices fell to their lowest level this year on Wednesday, wiping out all of the gains made since Russia's invasion of Ukraine. Far removed from the March high of $140/barrel, crude prices fell on Wednesday as a report emerged on a bigger-than-expected fuel inventory in the United States.
Brent crude fell $2.18, or 2.8%, to $77.17/barrel, ending below the year's previous closing low of $78.98/barrel on Jan 1. WTI crude fell by $2.24, declining further from the previous day’s yearly low to $72.01/barrel. This is the fifth straight session that oil prices have fallen and have been a major drag on the stock market
Economic Data
The Fed reported that Consumer Credit for October increased by $27 billion in October, while the same for September was revised up to $25.9 billion.
According to a weekly government report, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 5.2 million barrels from the previous week. At 413.9 million barrels, crude inventories are 9% below the five-year average for this period.