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

  • The S&P 500 hits its lowest since November 2020
  • Utility, consumption sectors lead to a decline
  • Investors worry about shrinking corporate earnings growth
  • Indices: Dow -0.74%, S&P 500 -0.57%, Nasdaq -0.24%

Sept 27 (Reuters) – Wall Street sank deeper into a bear market on Tuesday, with the S&P 500 hitting a two-year low during the day as Federal Reserve policymakers showed appetite for more rate hikes, even at the risk of plunging the economy into in a slump.

As the Fed signaled last week that high interest rates could last through 2023, the benchmark S&P 500 (.SPX) erased the last gains of a summer rally and hit its lowest level last seen in late November 2020. read more

On Tuesday, St. Louis Fed President James Bullard argued for more rate hikes, while Chicago Fed President Charles Evans said the central bank must raise interest rates by at least one more percentage point this year. read more

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

With Tuesday’s drop, the S&P 500 is down 24% from its record high at the close on Jan. 23.

Analysts at Wells Fargo now see the Fed taking its target range for the Fed funds rate to between 4.75% and 5.00% by the first quarter of 2023. read more

Ten of 11 S&P 500 sector indexes fell, led by a 2.0% drop in utilities (.SPLRCU) and a 1.8% decline in consumer staples (.SPLRCS).

Microsoft and Google parent Alphabet ( GOOGL.O ) each lost more than 1%, weighing heavily on the S&P 500. Tesla also rose about 1%, with $13 billion worth of shares traded, more than any other company on Wall Street.

The benchmark 10-year U.S. Treasury yield hit its highest level in more than 12 years amid hawkish comments from Fed officials.

In afternoon trade, the Dow Jones Industrial Average (.DJI) was down 0.74% at 29,045.38, while the S&P 500 (.SPX) lost 0.57% at 3,634.13.

The Nasdaq Composite (.IXIC) fell 0.24% to 10,777.00.

Concerns about corporate profits being hit by high prices and a weaker economy have also weighed on Wall Street over the past two weeks.

Analysts have cut their S&P 500 earnings expectations for the third and fourth quarters, as well as for the full year. For the third quarter, analysts now see S&P 500 earnings per share rising 4.6% year-over-year, compared with an expected 11.1% growth at the start of July. read more

Declining issues outnumbered advancing ones on the NYSE by a ratio of 1.60 to 1; on the Nasdaq a 1.21 to 1 ratio favored decliners.

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

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Reporting by Ankika Biswas, Shreyashi Sanyal and Susan Mathew in Bengaluru; Editing by Shounak Dasgupta, Arun Koyyur and David Gregory

Our standards: Thomson Reuters Trust Principles.

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