Wall Street sell-off deepens, Nasdaq confirms correction

WALL Street’s main indexes ended sharply lower on Wednesday, with the tech-heavy Nasdaq confirming it was in a correction, after a diverse set of corporate earnings and as investors continued to worry about higher US Treasury yields and the Federal Reserve tightening monetary policy.

The Nasdaq ended down 10.7% from its Nov 19 closing record high, as stocks sold off into the market close. A correction is confirmed when an index closes 10% or more below its record closing level.

The Dow Jones Industrial Average  fell 339.82 points or 0.96% to 35,028.65, the S&P 500 lost 44.35 points or 0.97% to 4,532.76 and the Nasdaq Composite dropped 166.64 points or 1.15% to 14,340.26.

Consumer discretionary fell most among S&P 500 sectors, dropping 1.8%, while financials dropped about 1.7% and technology slid 1.4%.

The Nasdaq’s last correction was in early 2021, when the tech-heavy index fell more than 10% from Feb 12 to March 8. It was the fourth time in the two years since the coronavirus pandemic shook global markets that the index has found itself in a correction.

On Wednesday, Apple shares fell 2.1%, weighing most on the Nasdaq, while declines in Tesla and Amazon also dragged on the index.

Stocks have gotten off to a rocky start in 2022, as a fast rise in Treasury yields amid concerns the Fed will become aggressive in controlling inflation has particularly hit tech and growth shares. The benchmark S&P 500 is down about 5% so far this year.

Invesco chief global market strategist Kristina Hooper said , chief global market strategist “Any beginning of tightening often results in significant volatility and I think there is always that risk that there is a policy error and it ends the economic cycle,”

“So we just have a lot of apprehension.”

The small-cap Russell 2000 fell 1.6%.

Stocks had tumbled on Tuesday, with the Nasdaq falling 2.6%, after weak results from Goldman Sachs and a spike in Treasury yields. US Treasury yields eased on Wednesday from two-year highs.

Investors are looking to next week’s Fed policy meeting for more clarity on central bankers’ plans to rein in inflation. Data last week showed US consumer prices increased solidly in December, culminating in the largest annual rise in inflation in nearly four decades.

“There’s a fair amount of anxiety in terms of how the next three to six months are going to play out with a rate-hike cycle set to start likely in March,” said Wedbush Securities managing director of equity trading Michael James.

In company news, shares of Procter & Gamble rose 3.4% after the consumer goods company bumped up its annual sales forecast.

Bank of America Corp reported a better-than-expected 30% jump in quarterly profit, while Morgan Stanley also reported fourth-quarter profit which beat market expectations, following uneven results from other banks. Bank of America shares rose 0.4%, while Morgan Stanley shares gained 1.8%.

Declining issues outnumbered advancing ones on the NYSE by a 2.06-to-1 ratio; on Nasdaq, a 2.09-to-1 ratio favored decliners.

The S&P 500 posted 13 new 52-week highs and seven new lows; the Nasdaq Composite recorded 23 new highs and 630 new lows.

About 11.4 billion shares changed hands in US exchanges, compared with the 10 billion daily average over the last 20 sessions. — Jan 20, 2022

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