Wall Street closed lower as the Fed pound exchange rate rose

  • Oil prices add to inflation problems after OPEC+ production cut
  • Weekly jobless claims in the US increased more than expected
  • Indices down: Dow Jones down 1.15%, Standard & Poor’s 1.02%, Nasdaq 0.68%

Oct 6 (Reuters) – Wall Street’s main indexes closed lower on Thursday as concerns mounted ahead of closely watched monthly nonfarm payroll numbers due on Friday that the Federal Reserve’s strong stance on interest rates would lead to a recession.

Markets were briefly relieved by data showing that weekly jobless claims rose by the most in four months last week, sparking a glimmer of hope that the Federal Reserve may ease implementation since March for the fastest and highest jump in rates in decades. Read more

The stock market has been slow to acknowledge a consistent message from Federal Reserve officials that interest rates will rise for much longer until the pace of inflation clearly slows.

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Chicago Fed President Charles Evans was the latest to clear the central bank’s forecast on Thursday, saying policy makers expect to provide a 125 basis point rate hike before the end of the year as inflation readings disappointed. Read more

“The market has been slowly getting the Fed’s message,” said Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia.

“There is a possibility that the Federal Reserve with increasing interest rates will push the economy into recession in order to reduce inflation,” Pride said. “We don’t think the markets have fully picked this up.”

Pride sees a moderate recession, but on average there was a 15% drop in earnings, which suggests the market could drop further. The S&P 500 is down 22% from its January 3 peak.

Average S&P drop in recession is 30%

Despite today’s decline, the three major indices were on the cusp of weekly gains after the sharp rally on Monday and Tuesday.

The job market remains tight even as demand begins to cool off amid higher rates. On Friday, the September non-farm payrolls report will help investors gauge whether the Federal Reserve changes its aggressive interest rate hike plans.

Money markets are pricing in a roughly 86% chance of a rate hike of 75 basis points, respectively, when policy makers meet on November 1 and 2.

To be clear, not everyone is expecting a hard landing.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, September 7, 2022. REUTERS/Brendan McDermid

Dave Sekera, Chief US Market Strategist at Morningstar Inc (Morno)He said growth will remain sluggish for the foreseeable future and likely not start accelerating until the second half of 2023, but he does not see a sharp regression.

“We don’t expect a recession,” Skira said. “Markets are looking for clarity as to when they believe economic activity will accelerate and bring about that sustainable recovery.

“They are also looking for strong evidence that inflation will start to trend really downward, back toward the Fed’s 2% target,” he said.

Ten of the 11 major S&P 500 sectors fell, led by a 3.3% drop in real estate. (.SPLRCU). Other indicators, including semiconductors, also declined (.sox)Lowercase letters (.rut) dao transportation (.DJT). growth stocks (.IGX) It decreased 0.76% while the value (.IVX) It decreased by 1.18%.

energy (.SPNY) The only winner, up 1.8%.

Oil prices rose, settling at their highest levels in three weeks after the Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed to cut production targets by two million barrels per day, the largest cut since 2020. Read more

Dow Jones Industrial Average (.DJI) The Standard & Poor’s Index fell 346.93 points, or 1.15%, to 29,926.94 points (.SPX) It lost 38.76 points, or 1.02%, to 3,744.52 points, and the Nasdaq Composite (nineteenth) It fell 75.33 points, or 0.68%, to 11,073.31 points.

Tesla Corporation (TSLA.O) Apollo Global Management Inc stock fell 1.1% (APO.N) And Sixth Street Partners, which was looking to secure funding for Elon Musk’s $44 billion Twitter deal, is no longer in talks with the billionaire. Read more

Alphabet Corporation (GOOGL.O) It basically closed after the launch of the new Google phones and its first smartwatch.

Volume on US exchanges was 10.57 billion shares, compared to an average of 11.67 billion shares for the full session over the past 20 trading days.

Low issues outnumbered advanced issues on the New York Stock Exchange by 2.32 to 1; On the Nasdaq, the ratio was 1.42 to 1 in favor of declining stocks.

The S&P 500 posted three new 52-week highs and 31 new lows; The Nasdaq recorded 46 new highs and 118 new lows.

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Reporting by Herbert Lash in New York Additional reporting by Ankika Biswas and Shreyachi Sanyal in Bengaluru Editing by Aaron Koyor and Matthew Lewis

Our criteria: Thomson Reuters Trust Principles.

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