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S&P, Nasdaq extend losing streaks amid rising recession worries

The S&P 500 and Nasdaq closed down on Wednesday after a choppy session on Wall Street, as investors struggled to grasp a clear direction as they weighed how the Federal Reserve’s monetary policy tightening might feed through into corporate America.

December 8, 2022
By David French
8 December 2022

By David French

Dec 7 (Reuters) – The S&P 500 and Nasdaq closed down on
Wednesday after a choppy session on Wall Street, as investors
struggled to grasp a clear direction as they weighed how the
Federal Reserve’s monetary policy tightening might feed through
into corporate America.

For the benchmark S&P 500, it was the fifth straight
session that it has declined, while the Nasdaq finished
down for the fourth time in a row. The Dow snapped a two-session
losing streak, as it ended unchanged from the previous day.

The Nasdaq was dragged down by a 1.4% drop in Apple Inc
on Morgan Stanley’s iPhone shipment target cut and a
3.2% fall in Tesla Inc over production loss worries.

Markets have also been rattled by downbeat comments from top
executives at Goldman Sachs Group Inc, JPMorgan Chase &
Co and Bank of America Corp on Tuesday that a
mild to more pronounced recession was likely ahead.

Fears that the U.S. central bank might stick to a longer
rate-hike cycle have intensified recently in the wake of strong
jobs and service-sector reports.

More economic data, including weekly jobless claims,
producer price index and the University of Michigan’s consumer
sentiment survey this week, will be on the watch list for clues
on what to expect from the Fed on Dec. 14.

“It feels like we’re in this very uncertain period where
investors are trying to ascertain what’s more important, as
policymakers are slowing down on rates but the data is not
playing ball,” said Craig Erlam, senior market analyst at OANDA.

“The market is trying to balance the headwinds and the
tailwinds and this is causing some confusion.”

The CBOE volatility index, also known as Wall
Street’s fear gauge, closed at 22.68, its highest finish since
Nov. 18.

Money market participants see a 91% chance that the Fed will
increase its key benchmark rate by 50 basis points in December
to 4.25%-4.50%, with rates peaking in May 2023 at 4.93%.

The S&P 500 lost 7.34 points, or 0.19%, to close at
3,933.92 and the Nasdaq Composite dropped 56.34 points,
or 0.51%, to finish at 10,958.55. The Dow Jones Industrial
Average was flat, ending on 33,597.92.

Concerns about a steep rise in borrowing costs have boosted
the dollar, but dented demand for risk assets such as equities
this year. The S&P 500 is on track to snap a three-year winning
streak.

Three of the 11 major S&P sector indexes were higher, with
healthcare one of them. Technology and
communication services, down 0.5 and 0.9%
respectively, were the worst performers.

Energy fell for its fifth straight session. The
sector’s performance was weighed by U.S. crude prices
falling again, settling at the lowest level in 2022, as concerns
over the outlook for global growth wiped out all of the gains
since Russia’s invasion of Ukraine exacerbated the worst global
energy supply crisis in decades.

Carvana Co had its worst day as a public company,
losing nearly half its stock value, after Wedbush downgraded the
used-car retailer’s stock to “underperform” from “neutral” and
slashed its price target to $1.

Meanwhile, United Airlines traded 4.1% lower. Unions
representing various workers at the airline said they would join
forces on contract negotiations.

Travel-related stocks were generally down. Delta Air Lines
and American Airlines Group were 4.4% and 5.4%
lower respectively, with cruise line operators Carnival Corp
and Norwegian Cruise Line Holdings and
accommodation-linked Airbnb Inc and Booking Holdings
all falling between 1.7% and 4.4%.

Volume on U.S. exchanges was 10.29 billion shares, compared
with the 10.98 billion average for the full session over the
last 20 trading days.

The S&P 500 posted seven new 52-week highs and seven new
lows; the Nasdaq Composite recorded 61 new highs and 307 new
lows.
(Reporting by Shubham Batra, Ankika Biswas, Johann M Cherian
and Shashwat Chauhan in Bengaluru and David French in New York;
Editing by Vinay Dwivedi, Shounak Dasgupta and Lisa Shumaker)

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