Recession fears, interest rate hikes make US stocks tumble

With the fears of recession gripping the Wall Street and the top CEOs critical of the Federal Reserves’ policy of interest hike, the US stocks tumbled Tuesday as a repeat of the previous session.

By the time trading was closed, the S&P 500 shed 1.44 percent to close at 3,941.26 and the Nasdaq Composite sank 2 percent to finish at 11,014.89. The Dow Jones Industrial Average dropped 350.76 points, or 1.03%, to settle at 33,596.34.

It was fourth straight day of losses for the S&P falling for a fourth straight session while the Dow has shed more than 830 points in two days.

With Tuesday’s losses, the S&P is already down 3.2 percent this week and the Nasdaq is off by 3.9 percent.

Shares of JPMorgan Chase, Walmart and Goldman Sachs, which are all Dow components, were flat and down 1.2 percent and 2.4 percent respectively. Boeing and Disney were the biggest Dow losers.

Media and bank stocks led the latest losses. Paramount Global’s CEO warned of lower fourth-quarter advertising revenue, sending shares down nearly 7 percent.

Morgan Stanley’s stock slumped amid news it’s planning to cut 2 percent of its workforce, continuing the recent layoff trend in the sector. Growth-focused technology names like Nvidia, Amazon and Meta Platforms also weighed on the market.

“Fundamentally, we are seeing another round of major layoffs this week and that only increases the odds that we have a hard landing in 2023 and enter a deeper recession than was initially expected,” said Adam Sarhan, CEO of 50 Park Investments.

JPMorgan Chase’s CEO Jamie Dimon echoed concerns of a downturn ahead, saying that inflation would push the economy into a recession.

Dimon added that he thought there could be a “mild to hard recession” due to the Federal Reserve’s continued interest rate hikes, as he also bashed crypto again, comparing tokens to “pet rocks”.

Walmart CEO Doug McMillon told CNBC that lower-end consumers were still feeling the pinch from inflation.

Markets are largely expecting the Federal Reserve to slow its hiking pace to a half-percentage-point increase when it meets next week. But investors fear a step down in its clip won’t be enough to stop the economy from entering a recession in 2023.

LEAVE A REPLY

Please enter your comment!
Please enter your name here