S&P posts fourth straight decline as recession talk weighs on Wall Street

S&P posts fourth straight decline as recession talk weighs on Wall Street

  • Meta stumbles upon EU concern report over targeted ads
  • Energy stocks fall as crude trades at lowest level since January
  • Indices down: Dow 1.03%, S&P 1.44%, Nasdaq 2%

Dec 6 (Reuters) – Wall Street ended lower on Tuesday, with the S&P 500 extending its losing streak to four sessions, as jittery investors worried about Federal Reserve rate hikes and talked more about a looming recession .

Meta Platforms Inc (META.O) dragged markets lower, its shares falling 6.8% following reports that European Union regulators ruled the company should not force users to accept personalized advertisements based on their digital activity.

However, tech stocks generally suffered as investors were wary of high-growth companies that would perform poorly in a tough economy. Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O) and Alphabet Inc (GOOGL.O) fell between 2.5% and 3%, while the tech-heavy Nasdaq was pulled higher low for a third consecutive session.

Most of the top 11 S&P sectors fell, with energy and communications services (.SPLRCL) joining technology (.SPLRCT) as the top laggards. Utilities (.SPLRCU), a defensive sector often favored in times of economic uncertainty, was the exception, gaining 0.7%.

Prospects for future economic growth were front and center on Tuesday after comments from financial titans pointing to uncertain times ahead.

Bank of America Corp (BAC.N) chief executive predicted three quarters of slightly negative growth next year, while JPMorgan Chase and Co (JPM.N) CEO Jamie Dimon said inflation would erode consumers’ purchasing power and that a mild to more severe recession was likely ahead.

Their comments follow recent views from BlackRock and others who believe aggressive monetary tightening by the US Federal Reserve to combat stubbornly high price increases could induce an economic slowdown in 2023.

“The market is very reactive right now,” said David Sadkin, president of Bel Air Investment Advisors.

He noted that while markets traditionally reflect the future, they are currently moving up and down based on the latest headlines.

Fears over economic growth come amid a reassessment by traders of the path future interest rate hikes will take, following strong employment and service sector data in recent days.

Money market bets indicate a 91% chance that the US central bank will raise rates by 50 basis points at its December 13-14 policy meeting, with rates expected to peak at 4.98% in May 2023 , compared to 4.92% estimated on Monday before the release of the services sector data.

The S&P 500 rose 13.8% in October and November on hopes of lower rate hikes and better-than-expected earnings, though those Fed expectations could be undermined by new data releases, including producer prices to be released on Friday.

“The market got ahead in late November, but then we got some good economic data, so people are reassessing what the Fed is going to do next week,” Bel Air’s Sadkin said.

The Dow Jones Industrial Average (.DJI) fell 350.76 points, or 1.03%, to close at 33,596.34, the S&P 500 (.SPX) lost 57.58 points, or 1.44% , to end at 3,941.26 and the Nasdaq Composite (.IXIC) fell 225.05 points, or 2%, to end at 11,014.89.

Nervousness over the direction of global growth also weighed on oil prices, with U.S. crude slipping to levels last seen in January, before Russia’s invasion of Ukraine disrupted supply markets. . The energy sector (.SPNY) fell 2.7% on Tuesday.

Banks are among the most sensitive stocks to an economic downturn, as they potentially face the negative effects of bad debt or slowing loan growth. The S&P Banks Index (.SPXBK) slid 1.4% to its lowest close since Oct. 21.

Volume on US exchanges was 11.01 billion shares, which is the average for the full session of the past 20 trading days.

The S&P 500 posted three new 52-week highs and nine new lows; the Nasdaq Composite recorded 52 new highs and 262 new lows.

Reporting by Devik Jain, Ankika Biswas and Johann M Cherian in Bengaluru and David French in New York; Editing by Vinay Dwivedi, Shounak Dasgupta and Lisa Shumaker

Our standards: The Thomson Reuters Trust Principles.

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