S&P 500 drops to two-year low as bear market deepens

  • The Standard & Poor’s 500 hit its lowest level since November 2020
  • Utilities and consumer discretionary sectors lead to decline
  • Investors are concerned about shrinking corporate earnings growth
  • Indices: Dow -0.74%, S&P 500 -0.57%, Nasdaq -0.24%

(Reuters) – Wall Street sank deeper into a bear market on Tuesday, with the S&P 500 hitting a two-year low on the day, as Federal Reserve policymakers showed a desire for more rate hikes, even as they risked dumping economy at home. shrinkage.

With the Fed signaling last week that higher interest rates could persist into 2023, the S&P 500 (.SPX) It erased its latest gains from the summer rally and touched lows last seen in late November 2020. Read more

On Tuesday, St. Louis Fed President James Bullard called for more rate hikes, while Chicago Fed President Charles Evans said the central bank would need to raise rates by at least another percentage point this year. Read more

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“It’s disappointing, but not a surprise,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “People are worried about the Fed, the direction of interest rates, the health of the economy.”

With Tuesday’s low, the S&P 500 is down 24% from its closing high on Jan. 23.

Analysts at Wells Fargo now see the US central bank raising the target range for the federal funds rate to between 4.75% and 5.00% by the first quarter of 2023. Read more

Ten sectoral indices out of the 11 S&P 500 indexes fell, led by a 2.0% decline in the utilities sector. (.SPLRCU) A 1.8% decrease in basic consumer goods (.SPLRCS).

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Microsoft and Google Alphabet parent company (GOOGL.O)Both lost just over 1% and weighed heavily on the S&P 500. Tesla’s stock also rose about 1%, with $13 billion worth of its shares being exchanged, more than any other company on Wall Street.

The benchmark 10-year US Treasury yield touched its highest level in more than 12 years amid hawkish rhetoric from Federal Reserve officials.

In afternoon trading, the Dow Jones Industrial Average (.DJI) The Standard & Poor’s Index fell 0.74% to 29,045.38 points (.SPX) It lost 0.57% to 3634.13.

Nasdaq Composite (nineteenth) It fell 0.24% to 10777.00.

Concerns about a hit to corporate earnings from rising prices and a weak economy have also rattled Wall Street in the past two weeks.

Analysts lowered their earnings forecasts for the S&P 500 for the third and fourth quarters, as well as for the full year. For the third quarter, analysts now see earnings per share for the S&P 500 rising 4.6% year over year, compared to expected growth of 11.1% at the beginning of July. Read more

Low issues outnumbered advanced issues on the New York Stock Exchange by 1.60 to 1; On the Nasdaq, the ratio was 1.21 to 1 in favor of declining stocks.

S&P 500 hits no new 52-week highs and 138 new lows; The Nasdaq Composite recorded 24 new highs and 425 new lows.

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Additional reporting by Ankika Biswas, Shrayachi Sanyal and Susan Mathew in Bengaluru; Editing by Shunak Dasgupta, Aaron Koyor and David Gregorio

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Our criteria: Thomson Reuters Trust Principles.

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