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The S&amp;P 500 (.SPX) fell to its lowest level in almost two years on Tuesday on worries about super aggressive Federal Reserve policy tightening, trading under its June trough and leaving investors appraising how much further stocks would have to fall before stabilizing.

Stocks have been under pressure since late August after comments and aggressive actions by the U.S. Federal Reserve signaled the central bank's top priority is to stamp out high inflation even at the risk of putting the economy into a recession.

The S&amp;P 500 touched a session low of 3,623.29, its lowest point on an intraday basis since Nov. 30, 2020. A late rally helped push the index off its worst level of the day, but the index still closed lower for a sixth straight session as it lost 7.75 points, or 0.21%, to 3,647.29 .

After the benchmark index fell more than 20% from its early January high to a low on June 16, which confirmed that the retreat was indeed a bear market, the S&amp;P then rallied into mid-August before running out of gas.

That bear-market rally is now over.

"As long as the Fed continues to raise rates, and investors don't anticipate an end of the rate hikes, I think this market is going to continue to be weak," said Tim Ghriskey, Senior Portfolio Strategist, Ingalls &amp; Snyder, New York.

The big blow for the index that re-ignited selling pressure was Fed Chair Jerome Powell's speech at Jackson Hole that confirmed the Fed's resolve to fight inflation, followed by a third straight 75 basis point interest rate hike by the central bank last week. The index has tumbled more than 12% since Powell's speech and has shown little signs of stabilizing.

Many analysts had looked at 3,900 as a strong technical support level for the index. That gave way 11 days ago under four straight days of selling.

"When you have these cascades of selling like we’ve seen since the Fed, really, support doesn’t really matter, you can slice right through it," said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska.

"Fundamentals and logic are almost thrown out the window because we are all wondering just how hawkish is the Fed, and then you look around this week and all these central banks around the globe hiked rates." Detrick said that coordinated hikes by multiple central banks left investors wondering how hawkish they all will end up being.

Robert Pavlik, Senior Portfolio Manager at Dakota Wealth in Fairfield, Connecticut said he is looking at a worst case of 3,000 for the S&amp;P as a support level.

"People are concerned about the Federal Reserve, the direction of interest rates, the health of the economy, and also the next couple of weeks with earnings season coming up and companies reporting lower-than-expected earnings."

Analysts are still looking for signposts of investor capitulation that can show selling pressure is exhausted. But sell-offs this year have not contained all those ingredients -- a sharp drop in prices, a day of unusually high volume and a jump in the CBOE Volatility index (.VIX) to 40 or above. So, many investors to conclude that selling has yet to be depleted.

"It goes down, you get some decent volume but you don’t necessarily have the classic signs of capitulation," said Brian Jacobsen, senior investment strategist at Allspring Global Investments in Menomonee Falls, Wisconsin.

"Maybe enough has changed over the years that some of those indicators aren’t going to be a very good guide for the future."

That leaves investors looking for the next catalyst to help markets stabilize, or get cheap enough for to start buying again, such as signs the Fed's actions may be starting to tame inflation, a weakening of the labor market, and what the upcoming corporate earnings season may bring about.

"On (October 7), you get the employment situation report and the following week you get the inflation report so we will be on pins and needles waiting to see what those numbers say, and then you have earnings," said Jacobsen.

S&P 500 falls to two-year low, bear market rally snuffed out

Stocks have been under pressure since late August after comments and aggressive actions by the U.S. Federal Reserve signaled the central bank's top priority is to stamp out high inflation even at the risk of putting the economy into a recession.

The S&amp;amp;P 500 (.SPX) fell to its lowest level in almost two years on Tuesday on worries about super aggressive Federal Reserve policy tightening, trading under its June trough and leaving investors appraising how much further stocks would have to fall before stabilizing.

Stocks have been under pressure since late August after comments and aggressive actions by the U.S. Federal Reserve signaled the central bank's top priority is to stamp out high inflation even at the risk of putting the economy into a recession.

The S&amp;amp;P 500 touched a session low of 3,623.29, its lowest point on an intraday basis since Nov. 30, 2020. A late rally helped push the index off its worst level of the day, but the index still closed lower for a sixth straight session as it lost 7.75 points, or 0.21%, to 3,647.29 .

After the benchmark index fell more than 20% from its early January high to a low on June 16, which confirmed that the retreat was indeed a bear market, the S&amp;amp;P then rallied into mid-August before running out of gas.

That bear-market rally is now over.

&quot;As long as the Fed continues to raise rates, and investors don't anticipate an end of the rate hikes, I think this market is going to continue to be weak,&quot; said Tim Ghriskey, Senior Portfolio Strategist, Ingalls &amp;amp; Snyder, New York.

The big blow for the index that re-ignited selling pressure was Fed Chair Jerome Powell's speech at Jackson Hole that confirmed the Fed's resolve to fight inflation, followed by a third straight 75 basis point interest rate hike by the central bank last week. The index has tumbled more than 12% since Powell's speech and has shown little signs of stabilizing.

Many analysts had looked at 3,900 as a strong technical support level for the index. That gave way 11 days ago under four straight days of selling.

&quot;When you have these cascades of selling like we’ve seen since the Fed, really, support doesn’t really matter, you can slice right through it,&quot; said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska.

&quot;Fundamentals and logic are almost thrown out the window because we are all wondering just how hawkish is the Fed, and then you look around this week and all these central banks around the globe hiked rates.&quot; Detrick said that coordinated hikes by multiple central banks left investors wondering how hawkish they all will end up being.

Robert Pavlik, Senior Portfolio Manager at Dakota Wealth in Fairfield, Connecticut said he is looking at a worst case of 3,000 for the S&amp;amp;P as a support level.

&quot;People are concerned about the Federal Reserve, the direction of interest rates, the health of the economy, and also the next couple of weeks with earnings season coming up and companies reporting lower-than-expected earnings.&quot;

Analysts are still looking for signposts of investor capitulation that can show selling pressure is exhausted. But sell-offs this year have not contained all those ingredients -- a sharp drop in prices, a day of unusually high volume and a jump in the CBOE Volatility index (.VIX) to 40 or above. So, many investors to conclude that selling has yet to be depleted.

&quot;It goes down, you get some decent volume but you don’t necessarily have the classic signs of capitulation,&quot; said Brian Jacobsen, senior investment strategist at Allspring Global Investments in Menomonee Falls, Wisconsin.

&quot;Maybe enough has changed over the years that some of those indicators aren’t going to be a very good guide for the future.&quot;

That leaves investors looking for the next catalyst to help markets stabilize, or get cheap enough for to start buying again, such as signs the Fed's actions may be starting to tame inflation, a weakening of the labor market, and what the upcoming corporate earnings season may bring about.

&quot;On (October 7), you get the employment situation report and the following week you get the inflation report so we will be on pins and needles waiting to see what those numbers say, and then you have earnings,&quot; said Jacobsen.

S&amp;P 500 falls to two-year low, bear market rally snuffed out

Monday brought a stark warning for Wall Street daredevils: Stocks are still in free fall and bearish sentiment is far from getting exhausted -- especially with hawkish central bankers rattling recession-obsessed markets like this.

The S&amp;P 500 just sank to the lowest since December 2020, bringing this month’s losses to nearly 8%, as the pound weakened to records while commodities buckled under the weight of a hulked-up dollar. US Treasury yields continued to rise, with the 10-year rate climbing as much as 21 basis points to 3.898%, its highest level since April 2010.

Monetary policy makers in Europe and the US gave no succor to risk assets that keep notching wretched milestones in the face of a concerted global increase in interest rates.

To cap it off: Ned Davis Research now sees a 98% chance of a looming global recession while Morgan Stanley Wealth Management’s Lisa Shalett warns earnings optimists are sleepwalking off a cliff.

With bad news around the world piling up, selling pressure is still coming thick and fast for an equity market that’s already enduring its worst performance since 2008.

“Unfortunately, this is just a process that’s going to need to play out because the Fed is not going to stop and the market has to price in accordingly,” Stephanie Lang, chief investment officer at Homrich Berg, said by phone. “There’s still some downside because of the outlook that if we’re not in a recession, we will be in one soon.”

<img class="aligncenter size-full wp-image-9235651" src="https://images.moneycontrol.com/static-mcnews/2022/09/391658701.jpg" alt="NASDAQ 100 Pierces Drawdown Low" width="1200" height="675" />

A dark day in UK trading undercut risk appetite across the world, fueling fears that something in financial markets is about to break, while central bankers in Europe and the US touted their inflation-fighting bona fides. The S&amp;P 500 fell for a fifth straight day, tech stocks suffered and the Russell 2000 index of smaller firms lost 1.4%.

Worries over economic growth have percolated for months, but incipient weakness in the industrial cycle and in US housing has investors worried that things are deteriorating quickly.

A global recession probability model by Ned Davis Research recently rose above 98%, triggering a “severe” recession signal. The only other times the model’s been that high was during previous acute downturns, such as in 2020 and 2008-2009, according to the firm’s Alejandra Grindal and Patrick Ayres.

“This indicates that the risk of severe global recession is rising for some time in 2023, which would create more downside risk for global equities,” they wrote in a note.

<img class="aligncenter size-full wp-image-9235661" src="https://images.moneycontrol.com/static-mcnews/2022/09/391656782.jpg" alt="No title provided" width="948" height="819" />

Monday marked yet another session of more than 400 S&amp;P 500 stocks closing lower. Almost every sector posted losses, with real estate and energy each dropping more than 2%. The benchmark index has now spent more than 110 days trading under its 200-day moving average, one of the longest such stretches going back to 2008.

Investors also piled into puts at a record pace on Friday, an event that has preceded previous market bottoms, while a slew of stocks are still trailing their short-term average prices.

Yet fear continues to surpass greed, discouraging dip buyers betting that the market has already bottomed as sentiment and positioning hits hard-to-sustain lows.

“The moves are so intense everyone is waiting to see if something collapses,” said Dennis DeBusschere, founder of 22V Research. “Some very bad market or economic outcome.”

Investors have spent the majority of 2022 resisting the idea of a profits recession -- something that’s looking harder to avoid by the day.

Indications of an economic slowdown, including in the housing market, mean that they could “face a day of reckoning” once they realize that Federal Reserve policy works with a lag, according to Shalett, who is CIO of Morgan Stanley Wealth Management.

The problem is that equity investors tend to only be good at translating economic data into earnings forecasts six months ahead, meaning that any current earnings tailwinds could be supporting “a false sense of security.” Yet policy operates with longer lags, sometimes of as much as two years.

“This bear market is not over and investors should expect more negative surprises if they continue to underestimate the impact of rapidly rising interest rates,” she wrote in a note, adding that a fourth-quarter bear-market rally should be sold.

<img class="aligncenter size-full wp-image-9235671" src="https://images.moneycontrol.com/static-mcnews/2022/09/391655993.jpg" alt="No title provided" width="541" height="308" />

A strong dollar, meanwhile, is posing challenges for global manufacturers. At one point on Monday, it rallied against every major currency, renewing calls of the dreaded “doom loop.”

“We almost have an arms race with central bankers raising rates and employers holding onto workers,” said Mike Bailey, director of research at FBB Capital Partners. “This could play out with pretty steep rates into next spring, which would be bad for bonds and high-growth stocks.”

Widespread selloff on Wall Street deepens on 98% recession odds

The S&P 500 just sank to the lowest since December 2020, bringing this month’s losses to nearly 8%, as the pound weakened to records while commodities buckled under the weight of a hulked-up dollar.

Monday brought a stark warning for Wall Street daredevils: Stocks are still in free fall and bearish sentiment is far from getting exhausted -- especially with hawkish central bankers rattling recession-obsessed markets like this.

The S&amp;amp;P 500 just sank to the lowest since December 2020, bringing this month’s losses to nearly 8%, as the pound weakened to records while commodities buckled under the weight of a hulked-up dollar. US Treasury yields continued to rise, with the 10-year rate climbing as much as 21 basis points to 3.898%, its highest level since April 2010.

Monetary policy makers in Europe and the US gave no succor to risk assets that keep notching wretched milestones in the face of a concerted global increase in interest rates.

To cap it off: Ned Davis Research now sees a 98% chance of a looming global recession while Morgan Stanley Wealth Management’s Lisa Shalett warns earnings optimists are sleepwalking off a cliff.

With bad news around the world piling up, selling pressure is still coming thick and fast for an equity market that’s already enduring its worst performance since 2008.

“Unfortunately, this is just a process that’s going to need to play out because the Fed is not going to stop and the market has to price in accordingly,” Stephanie Lang, chief investment officer at Homrich Berg, said by phone. “There’s still some downside because of the outlook that if we’re not in a recession, we will be in one soon.”



A dark day in UK trading undercut risk appetite across the world, fueling fears that something in financial markets is about to break, while central bankers in Europe and the US touted their inflation-fighting bona fides. The S&amp;amp;P 500 fell for a fifth straight day, tech stocks suffered and the Russell 2000 index of smaller firms lost 1.4%.

Worries over economic growth have percolated for months, but incipient weakness in the industrial cycle and in US housing has investors worried that things are deteriorating quickly.

A global recession probability model by Ned Davis Research recently rose above 98%, triggering a “severe” recession signal. The only other times the model’s been that high was during previous acute downturns, such as in 2020 and 2008-2009, according to the firm’s Alejandra Grindal and Patrick Ayres.

“This indicates that the risk of severe global recession is rising for some time in 2023, which would create more downside risk for global equities,” they wrote in a note.



Monday marked yet another session of more than 400 S&amp;amp;P 500 stocks closing lower. Almost every sector posted losses, with real estate and energy each dropping more than 2%. The benchmark index has now spent more than 110 days trading under its 200-day moving average, one of the longest such stretches going back to 2008.

Investors also piled into puts at a record pace on Friday, an event that has preceded previous market bottoms, while a slew of stocks are still trailing their short-term average prices.

Yet fear continues to surpass greed, discouraging dip buyers betting that the market has already bottomed as sentiment and positioning hits hard-to-sustain lows.

“The moves are so intense everyone is waiting to see if something collapses,” said Dennis DeBusschere, founder of 22V Research. “Some very bad market or economic outcome.”

Investors have spent the majority of 2022 resisting the idea of a profits recession -- something that’s looking harder to avoid by the day.

Indications of an economic slowdown, including in the housing market, mean that they could “face a day of reckoning” once they realize that Federal Reserve policy works with a lag, according to Shalett, who is CIO of Morgan Stanley Wealth Management.

The problem is that equity investors tend to only be good at translating economic data into earnings forecasts six months ahead, meaning that any current earnings tailwinds could be supporting “a false sense of security.” Yet policy operates with longer lags, sometimes of as much as two years.

“This bear market is not over and investors should expect more negative surprises if they continue to underestimate the impact of rapidly rising interest rates,” she wrote in a note, adding that a fourth-quarter bear-market rally should be sold.



A strong dollar, meanwhile, is posing challenges for global manufacturers. At one point on Monday, it rallied against every major currency, renewing calls of the dreaded “doom loop.”

“We almost have an arms race with central bankers raising rates and employers holding onto workers,” said Mike Bailey, director of research at FBB Capital Partners. “This could play out with pretty steep rates into next spring, which would be bad for bonds and high-growth stocks.”

Wall Street slid deeper into a bear market on Monday, with the S&amp;P 500 and Dow closing lower as investors fretted that the Federal Reserve's aggressive campaign against inflation could throw the U.S. economy into a sharp downturn.

After two weeks of mostly steady losses on the U.S. stock market, the Dow Jones Industrial Average (.DJI) confirmed it has been in a bear market since early January. The S&amp;P 500 index (.SPX) confirmed in June it was in a bear market, and on Monday it ended the session below its mid-June closing low, extending this year's overall selloff.

With the Fed signaling last Wednesday that high interest rates could last through 2023, the S&amp;P 500 has relinquished the last of its gains made in a summer rally.

"Investors are just throwing in the towel," said Jake Dollarhide, Chief Executive Officer of Longbow Asset Management in Tulsa, Oklahoma. "It's the uncertainty about the high-water mark for the Fed funds rate. Is it 4.6%, is it 5%? Is it sometime in 2023?"

Confidence among stock traders was also shaken by dramatic moves in the global foreign exchange market as sterling hit an all-time low on worries that the new British government's fiscal plan released Friday threatened to stretch the country's finances.

That added an extra layer of volatility to markets, where investors are worried about a global recession amid decades-high inflation. The CBOE Volatility index (.VIX), hovered near three-month highs.

The Dow is now down 20.5% from its record high close on Jan. 4. According to a widely used definition, ending the session down 20% or more from its record high close confirms the Dow has been in a bear market since hitting its January peak.

The S&amp;P 500 has yet to drop below its intra-day low on June 17. It is down about 23% so far in 2022.

In Monday's session, the Dow Jones Industrial Average (.DJI) fell 1.11% to end at 29,260.81 points, while the S&amp;P 500 (.SPX) lost 1.03% to 3,655.04.

The Nasdaq Composite (.IXIC) dropped 0.6% to 10,802.92.

Ten of 11 S&amp;P 500s sector indexes fell, led by 2.6% drops in real estate (.SPLRCR) and energy (.SPNY).

Gains in Amazon and Costco Wholesale Corp (COST.O) helped limit losses in the Nasdaq.

Shares of casino operators Wynn Resorts (WYNN.O), Las Vegas Sands Corp (LVS.N) and Melco Resorts &amp; Entertainment jumped between 11.8% and 25.5% after Macau planned to open to mainland Chinese tour groups in November for the first time in almost three years.

Volume on U.S. exchanges was 11.9 billion shares, compared with the 11.2 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 5.37-to-1 ratio; on Nasdaq, a 2.31-to-1 ratio favored decliners.

The S&amp;P 500 posted no new 52-week highs and 120 new lows; the Nasdaq Composite recorded 16 new highs and 594 new lows.

Wall Street ends lower, Dow confirms bear market

After two weeks of mostly steady losses on the U.S. stock market, the Dow Jones Industrial Average (.DJI) confirmed it has been in a bear market since early January.

Wall Street slid deeper into a bear market on Monday, with the S&amp;amp;P 500 and Dow closing lower as investors fretted that the Federal Reserve's aggressive campaign against inflation could throw the U.S. economy into a sharp downturn.

After two weeks of mostly steady losses on the U.S. stock market, the Dow Jones Industrial Average (.DJI) confirmed it has been in a bear market since early January. The S&amp;amp;P 500 index (.SPX) confirmed in June it was in a bear market, and on Monday it ended the session below its mid-June closing low, extending this year's overall selloff.

With the Fed signaling last Wednesday that high interest rates could last through 2023, the S&amp;amp;P 500 has relinquished the last of its gains made in a summer rally.

&quot;Investors are just throwing in the towel,&quot; said Jake Dollarhide, Chief Executive Officer of Longbow Asset Management in Tulsa, Oklahoma. &quot;It's the uncertainty about the high-water mark for the Fed funds rate. Is it 4.6%, is it 5%? Is it sometime in 2023?&quot;

Confidence among stock traders was also shaken by dramatic moves in the global foreign exchange market as sterling hit an all-time low on worries that the new British government's fiscal plan released Friday threatened to stretch the country's finances.

That added an extra layer of volatility to markets, where investors are worried about a global recession amid decades-high inflation. The CBOE Volatility index (.VIX), hovered near three-month highs.

The Dow is now down 20.5% from its record high close on Jan. 4. According to a widely used definition, ending the session down 20% or more from its record high close confirms the Dow has been in a bear market since hitting its January peak.

The S&amp;amp;P 500 has yet to drop below its intra-day low on June 17. It is down about 23% so far in 2022.

In Monday's session, the Dow Jones Industrial Average (.DJI) fell 1.11% to end at 29,260.81 points, while the S&amp;amp;P 500 (.SPX) lost 1.03% to 3,655.04.

The Nasdaq Composite (.IXIC) dropped 0.6% to 10,802.92.

Ten of 11 S&amp;amp;P 500s sector indexes fell, led by 2.6% drops in real estate (.SPLRCR) and energy (.SPNY).

Gains in Amazon and Costco Wholesale Corp (COST.O) helped limit losses in the Nasdaq.

Shares of casino operators Wynn Resorts (WYNN.O), Las Vegas Sands Corp (LVS.N) and Melco Resorts &amp;amp; Entertainment jumped between 11.8% and 25.5% after Macau planned to open to mainland Chinese tour groups in November for the first time in almost three years.

Volume on U.S. exchanges was 11.9 billion shares, compared with the 11.2 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 5.37-to-1 ratio; on Nasdaq, a 2.31-to-1 ratio favored decliners.

The S&amp;amp;P 500 posted no new 52-week highs and 120 new lows; the Nasdaq Composite recorded 16 new highs and 594 new lows.

US and European stocks tumbled on Friday, the dollar scaled a 22-year high and bonds sold off again as fears grew that a central bank prescription of raising interest rates to tame inflation will drag major economies into recession.

The Dow Industrials was poised to confirm a bear market as a deepening downturn in business activity across the euro zone, and U.S. business activity contracting for a third straight month in September, left Wall Street wallowing in a sea of red.

British assets weakened further after the UK government announced huge debt-financed tax cuts that will boost borrowing, sending UK bond yields vaulting higher in their biggest daily increases in decades.

The euro and sterling plummeted to 20- and 37-year lows, respectively, and the dollar soared as investors sought a new equilibrium in bond and stock valuations after the Federal Reserve this week signaled rates would be higher for longer.

George Goncalves, head of U.S. macro strategy at MUFG, said the Fed wanted financial conditions to tighten and that high interest rates were the mechanism to deliver a market that investors hadn’t seen for a long time.

”It’s something we’re not used to, that’s why it’s more surprising for most,” he said. ”It’s going to be a long staring contest between the Fed and the markets, and in the middle is the economy which is not responding yet to this tightening.”

MSCI’s world stocks index shed 2.57% and the pan-European STOXX 600 index closed down 2.34%.

On Wall Street, the Dow Jones Industrial Average fell 2.35%, making it the first major U.S. stock index to fall below its June trough on an intraday basis. The S&amp;P 500 lost 2.50% and the Nasdaq Composite dropped 2.55%.

Interest rates were also hiked in Britain, Sweden, Switzerland and Norway – among other places – this week, but it was the Fed’s signal that it expects high U.S. rates to last through 2023 that sparked the latest rout in equity and bond markets.

Investors are trying to get a handle on inflation to confidently determine how high rates will go, said Andrzej Skiba, head of the BlueBay U.S. Fixed Income team at RBC Global Asset Management.

”There’s unease in the market about having confidence that we know how inflation will develop and that yields will indeed peak in the mid-high 4s,” he said, referring to a Fed projection in late 2023 of the fed funds rate at 4.6%.

”People have been reflecting on that uncertainty and it might mean more tightening ahead, it might mean even more tightening of financial conditions that the markets have to go through.”

The euro fell for a fourth straight day, sliding 1.55% to $0.9684 after data showed the downturn in the German economy has worsened in September. The dollar index rose 1.627%.

The Japanese yen weakened 0.67% to 143.32 per dollar, but is likely set for its first weekly gain in more than a month after Japanese authorities intervened in markets on Thursday to support the currency for the first time since 1998.

The UK bond market went into a tailspin, with yields on the five-year gilt leaping about 50 basis points to 4.052%, the biggest one-day rise since at least late 1991, according to Refinitiv data, after the government unveiled its tax cuts.

Sterling, which fell 3.41% to $1.0873, had already been under severe pressure before the announcement. Since the start of July it’s down 9%, on track for its worst quarter since 2008.

”Typically looser fiscal and tighter monetary policy is a positive mix for a currency – if it can be confidently funded,” said Chris Turner, global head of markets at ING.

”Here is the rub – investors have doubts about the UK’s ability to fund this package, hence the gilt under-performance.”

With U.S. rates set to rise faster and stay high for longer, the dollar hit its highest in two decades and extended its double-digit gains for the year against several currencies.

Yields on the benchmark 10-year U.S. Treasury note have soared as investors ditch inflation-sensitive assets like bonds. Global government bond losses are on course for the worst year since 1949, BofA Global Research said in a note.

The yield on 10-year Treasury notes was down 2.5 basis points to 3.683%.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as a harbinger of a recession in a year or two, was at -51.6 basis points.

Euro zone bond yields also rose sharply, with the Italian 10-year hitting 4.294%, its highest since late 2013, ahead of Italian elections on Sunday.

Gold, which pays no interest, has come under pressure, particularly over the course of this quarter, as yields have risen. Spot gold dropped 1.6% to $1,643.85 an ounce.

Stocks tumble, dollar soars and bonds plunge as recession fears grow

On Wall Street, the Dow Jones Industrial Average fell 2.35%, making it the first major U.S. stock index to fall below its June trough on an intraday basis. The S&P 500 lost 2.50% and the Nasdaq Composite dropped 2.55%.

US and European stocks tumbled on Friday, the dollar scaled a 22-year high and bonds sold off again as fears grew that a central bank prescription of raising interest rates to tame inflation will drag major economies into recession.

The Dow Industrials was poised to confirm a bear market as a deepening downturn in business activity across the euro zone, and U.S. business activity contracting for a third straight month in September, left Wall Street wallowing in a sea of red.

British assets weakened further after the UK government announced huge debt-financed tax cuts that will boost borrowing, sending UK bond yields vaulting higher in their biggest daily increases in decades.

The euro and sterling plummeted to 20- and 37-year lows, respectively, and the dollar soared as investors sought a new equilibrium in bond and stock valuations after the Federal Reserve this week signaled rates would be higher for longer.

George Goncalves, head of U.S. macro strategy at MUFG, said the Fed wanted financial conditions to tighten and that high interest rates were the mechanism to deliver a market that investors hadn’t seen for a long time.

”It’s something we’re not used to, that’s why it’s more surprising for most,” he said. ”It’s going to be a long staring contest between the Fed and the markets, and in the middle is the economy which is not responding yet to this tightening.”

MSCI’s world stocks index shed 2.57% and the pan-European STOXX 600 index closed down 2.34%.

On Wall Street, the Dow Jones Industrial Average fell 2.35%, making it the first major U.S. stock index to fall below its June trough on an intraday basis. The S&amp;amp;P 500 lost 2.50% and the Nasdaq Composite dropped 2.55%.

Interest rates were also hiked in Britain, Sweden, Switzerland and Norway – among other places – this week, but it was the Fed’s signal that it expects high U.S. rates to last through 2023 that sparked the latest rout in equity and bond markets.

Investors are trying to get a handle on inflation to confidently determine how high rates will go, said Andrzej Skiba, head of the BlueBay U.S. Fixed Income team at RBC Global Asset Management.

”There’s unease in the market about having confidence that we know how inflation will develop and that yields will indeed peak in the mid-high 4s,” he said, referring to a Fed projection in late 2023 of the fed funds rate at 4.6%.

”People have been reflecting on that uncertainty and it might mean more tightening ahead, it might mean even more tightening of financial conditions that the markets have to go through.”

The euro fell for a fourth straight day, sliding 1.55% to $0.9684 after data showed the downturn in the German economy has worsened in September. The dollar index rose 1.627%.

The Japanese yen weakened 0.67% to 143.32 per dollar, but is likely set for its first weekly gain in more than a month after Japanese authorities intervened in markets on Thursday to support the currency for the first time since 1998.

The UK bond market went into a tailspin, with yields on the five-year gilt leaping about 50 basis points to 4.052%, the biggest one-day rise since at least late 1991, according to Refinitiv data, after the government unveiled its tax cuts.

Sterling, which fell 3.41% to $1.0873, had already been under severe pressure before the announcement. Since the start of July it’s down 9%, on track for its worst quarter since 2008.

”Typically looser fiscal and tighter monetary policy is a positive mix for a currency – if it can be confidently funded,” said Chris Turner, global head of markets at ING.

”Here is the rub – investors have doubts about the UK’s ability to fund this package, hence the gilt under-performance.”

With U.S. rates set to rise faster and stay high for longer, the dollar hit its highest in two decades and extended its double-digit gains for the year against several currencies.

Yields on the benchmark 10-year U.S. Treasury note have soared as investors ditch inflation-sensitive assets like bonds. Global government bond losses are on course for the worst year since 1949, BofA Global Research said in a note.

The yield on 10-year Treasury notes was down 2.5 basis points to 3.683%.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as a harbinger of a recession in a year or two, was at -51.6 basis points.

Euro zone bond yields also rose sharply, with the Italian 10-year hitting 4.294%, its highest since late 2013, ahead of Italian elections on Sunday.

Gold, which pays no interest, has come under pressure, particularly over the course of this quarter, as yields have risen. Spot gold dropped 1.6% to $1,643.85 an ounce.

Name		Price	Change	Change%
CRM	Salesforce.com	148.86	2.54	1.74
DOW	Dow Inc	43.81	0.42	0.97
HD	Home Depot	268.89	2.31	0.87
AAPL	Apple	151.87	1.10	0.73
TRV	Travelers Companies	151.19	0.59	0.39

Name		Price	Change	Change%
MCD	McDonalds	236.74	-7.02	-2.88
PG	P&G	132.00	-3.71	-2.73
KO	Coca-Cola	56.38	-1.49	-2.57
DIS	Walt Disney	95.87	-2.25	-2.29
V	Visa	178.01	-2.58	-1.43

Name		Price	Market Cap (in billion US $)
AAPL	Apple	151.87	2,440.67
MSFT	Microsoft	236.60	1,764.54
UNH	UnitedHealth	508.96	476.07
JNJ	J&J	165.02	433.87
V	Visa	178.01	368.27

Fund	AUM $	1 Y	3 Y	5 Y	Exp. Ratio
Franklin India Feeder - Franklin U.S. Opportunities Fund - Growth	3106.7	-30.29%	9.46%	11.82%	1.54
ICICI Prudential US Bluechip Equity Fund - Growth	2025.42	-13.29%	10.92%	12.37%	2.18
ICICI Prudential NASDAQ 100 Index Fund - Direct Plan - Growth	300.45	0%	0%	0%	0.5
IDFC US Equity Fund of Fund - Direct Plan - Growth	324.53	-14.6%	0%	0%	0.41
Nippon India US Equity Opportunities Fund - Growth	534.54	-19.46%	9.1%	11.34%	2.53
Aditya Birla Sun Life NASDAQ 100 FOF - Direct Plan - Growth	90.2	0%	0%	0%	0.13
Motilal Oswal Nasdaq 100 ETF (MOSt Shares NASDAQ 100)	5133.94	-18.68%	18.65%	18.82%	0.58
DSP US Flexible Equity Fund - Direct Plan - Growth	692.35	-5.7%	14.55%	13.09%	1.52
Edelweiss US Technology Equity FOF - Growth	1641.54	-33.47%	0%	0%	2.37
Edelweiss US Value Equity Offshore Fund - Regular Plan - Growth	79.32	-1.77%	11.08%	9.98%	2.37

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01:29
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01:29
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US Markets

01:29 Dow Jones 29,134.99 -125.82 (-0.43%)

01:16 Nasdaq 10,829.50 26.58 (0.25%)

01:29 S&P 500 3,647.29 -7.75 (-0.21%)

ADVANCE / DECLINE

01:29
Dow Jones 29,134.99 -125.82 (-0.43%)

01:16
Nasdaq 10,829.50 26.58 (0.25%)

01:29
S&P 500 3,647.29 -7.75 (-0.21%)