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Wall Street’s mayhem continued on Friday as U.S. stock markets closed sharply lower. Market participants are highly concerned about an imminent recession in the U.S. economy and globally. Despite adopting an extreme-hawkish monetary stance, the Fed failed to control soaring inflation. All the three major stock indexes ended deep in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) tumbled 1.6% or 486.27 points to close at 29,590.24. The blue-chip index posted its lowest closing and intraday session low in 2022. The index is currently on the verge of entering bear market territory falling 19.9% from its recent high. Notably, 28 components of the 30-stock index ended in negative territory while 2 in green.
The tech-heavy Nasdaq Composite finished at 10,867.93, sliding 1.8% or 198.88 points due to a devastation of large-cap technology stocks. The tech-laden index reported its intraday session low in 2022.
The S&P 500 dropped 1.7% to end at 3,693.23. The broad-market index too reported its intraday session low in 2022. All 11 broad sectors of the benchmark index closed in negative zone. The Consumer Discretionary Select Sector SPDR (XLY), the Materials Select Sector SPDR (XLB) and the Energy Select Sector SPDR (XLE) plunged 2.3%, 2.1% and 6.9%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 9.4% to 29.92. A total of 10.56 billion shares were traded on Friday, higher than the last 20-session average of 10.50 billion. Decliners outnumbered advancers on the NYSE by a 7.00-to-1 ratio. On Nasdaq, a 4.00 -to-1 ratio favored declining issues.
A Difficult Situation
On Sep 21, the Fed raised the benchmark interest rate by 75 basis points in the third successive FOMC meeting. With this, the Fed Fund rate jumped to the range of 3-3.25% from a mere 0-0.25% in early March. Market participants are now adjusting the cost of an imminent recession in the U.S. economy into stock markets’ valuation.
The Fed has raised the median of the Fed Fund rate to 4.4% in September from 3.4% in June. This means that the range of the benchmark lending rate at the end of 2022 will be 4.25-4.5%, indicating a 75 basis-point and 50 basis-point interest rate hike in November and December, respectively. Further, the central bank has projected that the median benchmark interest rate will reach 4.6% in 2023.
As of Sep 23, the DXY closed at 113.02, marking its 52-week high. The index is currently at its 20-year high. With respect to the U.S. dollar, – the British pound is at a 37-year low, the Japanese yen is at a 20-year low and the euro is at a 20-year low.
As of Sep 23, the yield on the benchmark 10-Year U.S. Treasury Note closed at 3.687%, after touching 3.829%, its highest since April 2011. The yield on the short-term 2-year U.S. Treasury Note closed at 4.203% after touching 4.266%, its highest in 15 years. The yield on the long-term 30-Year U.S. Treasury Note closed at 3.61%.
The yields of 2-year and 10-Year Notes have inverted for the last two months. After the last round rate hike, the yields on 10-Year and 30-Year Notes have also inverted. Economists generally consider this situation as a sign of an imminent recession.
The U.S. benchmark - West Texas Intermediate crude price fell 5.7%, to settle at $78.74 a barrel, posting the lowest settlement since Jan. 10. The global benchmark - Brent crude price fell 4.8% to settle at $86.15 a barrel, recording the lowest settlement since Jan. 10. Moreover, the U.S. gold future price fell 1,5% to settle at $1,655.60, its lowest since April 2020.
Weekly Roundup
Last week was a highly disappointing for Wall Street. The three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – plummeted 4%, 4.6% and 5.1%, respectively. Despite adopting an extreme-hawkish monetary stance, the Fed failed to control soaring inflation. Investors are highly concerned about an imminent recession in the U.S. economy and globally. As a result, Investors’ sentiment dented significantly.
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Stock Market News for Sep 26, 2022
Wall Street’s mayhem continued on Friday as U.S. stock markets closed sharply lower. Market participants are highly concerned about an imminent recession in the U.S. economy and globally. Despite adopting an extreme-hawkish monetary stance, the Fed failed to control soaring inflation. All the three major stock indexes ended deep in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) tumbled 1.6% or 486.27 points to close at 29,590.24. The blue-chip index posted its lowest closing and intraday session low in 2022. The index is currently on the verge of entering bear market territory falling 19.9% from its recent high. Notably, 28 components of the 30-stock index ended in negative territory while 2 in green.
The tech-heavy Nasdaq Composite finished at 10,867.93, sliding 1.8% or 198.88 points due to a devastation of large-cap technology stocks. The tech-laden index reported its intraday session low in 2022.
The S&P 500 dropped 1.7% to end at 3,693.23. The broad-market index too reported its intraday session low in 2022. All 11 broad sectors of the benchmark index closed in negative zone. The Consumer Discretionary Select Sector SPDR (XLY), the Materials Select Sector SPDR (XLB) and the Energy Select Sector SPDR (XLE) plunged 2.3%, 2.1% and 6.9%, respectively.
The major loser of the S&P 500 Index was APA Corp. (APA - Free Report) shares of which fell 11.4%. The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The fear-gauge CBOE Volatility Index (VIX) was up 9.4% to 29.92. A total of 10.56 billion shares were traded on Friday, higher than the last 20-session average of 10.50 billion. Decliners outnumbered advancers on the NYSE by a 7.00-to-1 ratio. On Nasdaq, a 4.00 -to-1 ratio favored declining issues.
A Difficult Situation
On Sep 21, the Fed raised the benchmark interest rate by 75 basis points in the third successive FOMC meeting. With this, the Fed Fund rate jumped to the range of 3-3.25% from a mere 0-0.25% in early March. Market participants are now adjusting the cost of an imminent recession in the U.S. economy into stock markets’ valuation.
The Fed has raised the median of the Fed Fund rate to 4.4% in September from 3.4% in June. This means that the range of the benchmark lending rate at the end of 2022 will be 4.25-4.5%, indicating a 75 basis-point and 50 basis-point interest rate hike in November and December, respectively. Further, the central bank has projected that the median benchmark interest rate will reach 4.6% in 2023.
As of Sep 23, the DXY closed at 113.02, marking its 52-week high. The index is currently at its 20-year high. With respect to the U.S. dollar, – the British pound is at a 37-year low, the Japanese yen is at a 20-year low and the euro is at a 20-year low.
As of Sep 23, the yield on the benchmark 10-Year U.S. Treasury Note closed at 3.687%, after touching 3.829%, its highest since April 2011. The yield on the short-term 2-year U.S. Treasury Note closed at 4.203% after touching 4.266%, its highest in 15 years. The yield on the long-term 30-Year U.S. Treasury Note closed at 3.61%.
The yields of 2-year and 10-Year Notes have inverted for the last two months. After the last round rate hike, the yields on 10-Year and 30-Year Notes have also inverted. Economists generally consider this situation as a sign of an imminent recession.
The U.S. benchmark - West Texas Intermediate crude price fell 5.7%, to settle at $78.74 a barrel, posting the lowest settlement since Jan. 10. The global benchmark - Brent crude price fell 4.8% to settle at $86.15 a barrel, recording the lowest settlement since Jan. 10. Moreover, the U.S. gold future price fell 1,5% to settle at $1,655.60, its lowest since April 2020.
Weekly Roundup
Last week was a highly disappointing for Wall Street. The three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – plummeted 4%, 4.6% and 5.1%, respectively. Despite adopting an extreme-hawkish monetary stance, the Fed failed to control soaring inflation. Investors are highly concerned about an imminent recession in the U.S. economy and globally. As a result, Investors’ sentiment dented significantly.