Tuesday, September 27, 2022

Dow narrows losses after falling by 500 points on fears of prolonged inflation

Stocks ended the whipsaw session lower on concerns that inflation, while it may have peaked, would remain elevated and could lead to an increasingly aggressive policy tightening from the Federal Reserve.

The Dow tumbled more than 500 points in afternoon trading, which was seen before a sharp sell-off in all three major stock indexes before a recovery. The S&P 500 was well off the closing level, which confirms that it has entered a bear market after hitting its all-time high on January 3.

“At the end of the day, measuring investor sentiment isn’t easy,” said Chuck Carlson, chief executive officer of Horizon Investment Services in Hammond, Indiana. “Recent bear markets have been bloody but brief.”

“But when you take inflation into account it’s likely that a bear market will last more than four or five months.”

The Dow Jones Industrial Average fell 103.81 points, or 0.3%, to 31,730.30, the S&P 500 fell 5.10 points to 3,930.08 and the Nasdaq Composite rose 6.72 points to 11,370.96.

Market-leading megacap names, which thrived amid the low-interest environment of the pandemic era, were the biggest drag, with Apple and Microsoft weighing the heaviest.

Market participants were digesting economic data, most recently a report on producer prices released ahead of Thursday’s opening bell, which suggest that price growth has reached its peak in March.

All three major stock indexes were seen before settling into a sharp selloff.
Reuters

Nevertheless, the Fed is still expected to raise key interest rates by at least 50 basis points at least three times in the coming months, in an effort to toss cold water on demand and rein in rising prices.

“This is a market that continues to struggle to calibrate the impact of inflationary losses,” Carlson said. “At the end of the day this is the first time in decades that investors have had to include inflation in their market calculations.”

Geopolitical tensions surrounding Russia’s war on Ukraine were dialed in by Finland’s announcement that it would apply for NATO membership, with Sweden expected to follow suit, a move that prompted a pledge of retaliation from the Kremlin. inspired.

The conflict, dubbed a “special military operation” by Russian President Vladimir Putin, has fueled inflationary flames by putting pressure on global energy and grain supplies.

Among the 11 key sectors of the S&P 500, tech stocks were losing the most percentage.

According to Refinitiv, earnings season is nearing the end, and according to the most recent data, 79% of the S&P 500 companies that have posted results have posted better-than-expected earnings.

Analysts are now seeing an 11% increase in first-quarter S&P 500 earnings, up from 6.4% at the end of the quarter, per Refinitiv.

Shares of luxury accessories company Tapestry jumped 16% after it expressed confidence in a rebound in Chinese demand once COVID restrictions are lifted.

Walt Disney declined 0.9% after the media company’s disappointing quarterly report.

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Nation World News Desk
Nation World News Deskhttps://nationworldnews.com
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