WALL Street slid deeper into a bear market on Monday with the S&P 500 and Dow closing lower as investors fretted that the US Federal Reserve’s aggressive campaign against inflation could throw the US economy into a sharp downturn.
After two weeks of mostly steady losses on the US stock market, the Dow Jones Industrial Average confirmed it has been in a bear market since early January.
In Monday’s session, the Dow fell 329.60 points or 1.11% to end at 29,260.81 points while the S&P 500 lost 38.19 points or 1.03% to 3,655.04. The Nasdaq Composite dropped 65 points or 0.6% to 10,802.92.
The S&P 500 index has confirmed in June it was in a bear market. On Monday, it ended the session below its mid-June closing low, extending this year’s overall sell-off. It is down about 23% so far in 2022.
With the Fed signaling last Wednesday that high interest rates could last through 2023, the S&P 500 has relinquished the last of its gains made in a summer rally.
“Investors are just throwing in the towel,” said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma. “It’s the uncertainty about the high-water mark for the Fed funds rate. Is it 4.6%, is it 5%? Is it sometime in 2023?”
Confidence among stock traders was also shaken by dramatic moves in the global foreign exchange market as sterling hit an all-time low on worries that the new British Government’s fiscal plan released Friday (Sept 23) threatened to stretch the country’s finances.
That added an extra layer of volatility to markets, where investors are worried about a global recession amid decades-high inflation. The CBOE Volatility index hovered near three-month highs.
The Dow is now down 20.5% from its record high close on Jan 4. According to a widely used definition, ending the session down 20% or more from its record high close confirms the Dow has been in a bear market since hitting its January peak.
Ten of 11 S&P 500s sector indexes fell, led by 2.6% drops in real estate and energy. However, gains in Amazon and Costco Wholesale Corp helped limit losses in the Nasdaq.
Shares of casino operators Wynn Resorts, Las Vegas Sands Corp and Melco Resorts & Entertainment jumped between 11.8% and 25.5% after Macau planned to open to mainland Chinese tour groups in November for the first time in almost three years.
Volume on US exchanges was 11.9 billion shares compared with the 11.2 billion average for the full session over the last 20 trading days.
Declining issues outnumbered advancing ones on the NYSE by a 5.37-to-1 ratio; on Nasdaq, a 2.31-to-1 ratio favored decliners.
The S&P 500 posted no new 52-week highs and 120 new lows; the Nasdaq Composite recorded 16 new highs and 594 new lows. – Sept 27, 2022