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S&P, Nasdaq extend losing streaks on growing recession worries

  • Apple down after Morgan Stanley cuts December shipment target
  • Tesla falls on concerns about production losses
  • Carvana records worst daily drop ever
  • Indices: Dow flat, S&P down 0.19%, Nasdaq 0.51%

Dec 7 (Reuters) – The S&P 500 and Nasdaq closed after a choppy session on Wall Street on Wednesday, as investors struggled to grasp a clear direction as they weighed how the Federal Reserve’s monetary tightening could hurt corporate America.

For the benchmark S&P 500 (.SPX), it was the fifth session in a row that it fell, while the Nasdaq (.IXIC) ended down for the fourth time in a row. The Dow snapped a two-session losing streak as it ended unchanged from the previous day.

The Nasdaq was dragged down by a 1.4% drop in Apple Inc ( AAPL.O ) on Morgan Stanley’s iPhone shipment target and a 3.2% drop in Tesla Inc ( .IXIC ) on concerns about production losses.

Markets have also been rattled by downbeat comments from top executives at Goldman Sachs Group Inc ( GS.N ), JPMorgan Chase & Co ( JPM.N ) and Bank of America Corp ( BAC.N ) on Tuesday about a mild to more pronounced recession was probably in front.

Fears that the US central bank may stick to a longer rate hike cycle have intensified recently in the wake of strong jobs and services sector reports.

More economic data, including weekly jobless claims, the producer price index and the University of Michigan’s consumer sentiment survey this week, will be on the watch list for clues about what to expect from the Fed on December 14.

“It feels like we’re in this very uncertain period where investors are trying to figure out what’s more important as policymakers slow down, but the data isn’t playing ball,” said Craig Erlam, senior market analyst at OANDA.

“The market is trying to balance headwinds and tailwinds, and this creates some confusion.”

The CBOE Volatility Index (.VIX), also known as Wall Street’s fear gauge, closed at 22.68, its highest finish since Nov. 18.

Money market participants see a 91% chance the Fed will raise its benchmark interest rate by 50 basis points in December to 4.25%-4.50%, with rates peaking in May 2023 at 4.93%.

The S&P 500 (.SPX) lost 7.34 points, or 0.19%, to settle at 3,933.92 and the Nasdaq Composite (.IXIC) shed 56.34 points, or 0.51%, to end at 10,958 ,55. The Dow Jones Industrial Average (.DJI) was flat, ending at 33,597.92.

Concerns about a sharp rise in borrowing costs have boosted the dollar but reduced demand for risky assets such as stocks this year. The S&P 500 is on track to snap a three-year winning streak.

Three of the 11 major S&P sector indexes were higher, with health care (.SPXHC) one of them. Technology (.SPLRCT) and communications services (.SPLRCL), down 0.5% and 0.9% respectively, were the worst performers.

Energy (.SPNY) fell for its fifth consecutive session. The sector’s performance was weighed down by US crude oil prices falling again to settle at their lowest level in 2022, as concerns over the outlook for global growth wiped out any gains since Russia’s invasion of Ukraine exacerbated the worst global energy supply crisis in decades.

Carvana Co ( CVNA.N ) had its worst day as a public company, losing nearly half of its share value, after Wedbush downgraded the used car retailer’s stock to “underperform” from “neutral” and cut its price target to $1.

Meanwhile, United Airlines ( UAL.O ) traded 4.1% lower. Unions representing various workers at the airline said they would join forces on contract negotiations.

Travel-related stocks were generally down. Delta Air Lines ( DAL.N ) and American Airlines Group ( AAL.O ) were 4.4% and 5.4% lower, respectively, with cruise lines Carnival Corp ( CCL.N ) and Norwegian Cruise Line Holdings ( NCLH.N ) and accommodation-linked Airbnb Inc ( ABNB.O ) and Booking Holdings ( BKNG.O ) all fell between 1.7% and 4.4%.

Volume on US exchanges was 10.29 billion shares, compared to the 10.98 billion average for the full session over the past 20 trading days.

The S&P 500 posted seven new 52-week highs and seven new lows; The Nasdaq Composite registered 61 new highs and 307 new lows.

Reporting by Shubham Batra, Ankika Biswas, Johann M Cherian and Shashwat Chauhan in Bengaluru and David French in New York; Editing by Vinay Dwivedi, Shounak Dasgupta and Lisa Shumaker

Our standards: Thomson Reuters Trust Principles.

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