U.S. stocks edged lower in choppy trade on Wednesday, extending a downtrend that began the week as investors weigh higher interest rates and the prospect of an economic slowdown against optimism around the relaxation of COVID protocols in China.
The S&P 500 (^GSPC) fell 0.3%, while the Dow Jones Industrial Average (^DJI) fell about 50 points, or 0.2%. The tech-heavy Nasdaq Composite (^IXIC) fell 0.7%.
In commodity markets, oil extended its losses to trade near $72 a barrel after falling about 10% this week to the lowest level since January.
“Fears are growing that economies are going through tough times as feverish inflation and the bitter interest rate medicine used to drive it down take effect,” said Susannah Streeter, principal investment and market analyst at Hargreaves Lansdown. , in a morning note, also pointing to recession warnings from US bank bosses and dismal trade data in China. “Despite today’s easing of restrictions, it is clear that China’s Covid nightmare is not over.”
A chorus of upbeat remarks from Wall Street executives on Tuesday further weighed on sentiment already down this week, as many expressed concerns about the toll of inflation and high interest rates on consumers. Americans.
JPMorgan CEO Jamie Dimon said the $1.5 trillion in excess savings in Americans’ bank accounts was being eroded by rising prices, while warning that shrinking cash on hand could “derail economy and cause this mild or severe recession that people are worried about.” Bank of America chief Brian Moynihan echoed a similar message, saying that if consumers keep spending money, the pace starts to slow.
Meanwhile, Goldman Sachs (GS) CEO David Solomon predicted stocks would fall in 2023 and put the probability of a soft landing at just 35% – a view at odds with his insider economists. investment bank, which forecast in their baseline forecast that the United States will narrowly avoid a recession next year.
“There’s a very reasonable possibility that we’re going to have some sort of recession,” Solomon said in an interview at The Wall Street Journal’s Council of CEOs Summit on Wednesday afternoon.
Reports that the Chinese government would roll back some zero-COVID rules appeared to discourage investors who compare the easing of restrictions to the country’s economic data which showed a drop in imports and exports in November.
Back in the US, shares of Campbell Soup (CPB) rose 5% after the canned food producer reported earnings above Wall Street’s estimate and raised its full-year forecast. The company said soup sales in the United States jumped 11% due to increased demand for ready-to-serve soups, condensed soups and broths, reflecting a recent shift among consumers to value food purchases as inflation continues to weigh on households.
Shares of Apple (AAPL) fell 1.5%, a day after Bloomberg News reported that the iPhone maker had scaled back ambitious self-driving plans for its future electric vehicle and postponed release data for the car to 2026. Bloomberg also reported Wednesday morning that mobile industry leader Murata Manufacturing expects Apple to further scale back production plans for its iPhone 14 due to weakening demand.
Investors await another round of economic data ahead of the Federal Reserve’s final rate-setting meeting this year. Readings on weekly jobless claims, producer price inflation and consumer sentiment are due out later this week, but the most important data point for clues on the Fed’s direction on interest rate is the Consumer Price Index (CPI) released on Tuesday, the same day U.S. central bank officials kick off their final two-day rate-setting meeting of 2022.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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