S&P 500 and Nasdaq drop as weak economic data and poor outlook stoke recession fears

NEW YORK (Reuters) – The S&P 500 and Nasdaq closed in the red on Tuesday as fears that aggressive moves to curb decades of high inflation could push the U.S. economy into recession dented investors’ appetite for risk.

All major US stock indexes pared their losses in afternoon trading, with the Dow Jones Super Index turning positive. However, the S&P 500 finished just 2.2 percentage points above confirmation that it had been in a bear market since hitting an all-time high on January 3.

“As we pull back and acknowledge the underlying market catalysts, it was really about the Fed pivot and the change in interest rates, which affected prices across capital markets,” said Bill Northey, senior investment manager at US Bank Wealth Management in Helena. , Montana.

“In the past two weeks, we have seen a degree of macroeconomic deterioration beginning to manifest itself in corporate earnings and economic releases.”

Most of the sale was prompted by a profit warning from Snap Inc, which sent the company’s shares down 43.1%, spreading the contagion throughout the social media sector.

Meta Platforms Company (FB.O)Alphabet Corporation (GOOGL.O)Twitter Inc and Pinterest Inc slipped between 5% and 24%, and the broader S&P 500 telecom services sector (.SPLRCL) slipped 3.7%.

Global supply chain disruptions exacerbated by Russia’s war with Ukraine and China’s restrictive measures to control the recent COVID-19 outbreak have pushed inflation to its highest levels in several decades.

The US Federal Reserve has pledged to aggressively deal with continued price growth by raising the cost of borrowing, and the minutes of its latest monetary policy meeting, expected on Wednesday, will be analyzed by market participants for clues as to the speed and extent of those measures.

Investors are currently anticipating a series of interest rate hikes of 50 basis points over the next several months, fueling fears that the central bank could push the economy into recession, a scenario that is increasingly being factored into analyst forecasts.

“We are looking forward to the FOMC minutes tomorrow for any indications that the monetary policy approach may be more hawkish or dovish than laid out at the last meeting,” said Northey of US Bank Wealth Management.

Data released on Tuesday painted a picture of waning economic momentum, with new home sales falling and business activity slowing.

Federal Reserve Bank counterpart Jerome Powell in Frankfurt, ECB President Christine Lagarde, said she expects to raise the ECB deposit rate by at least 50 basis points by the end of September, Read more

Dow Jones Industrial Average (.DJI) It rose 48.38 points, or 0.15%, to 31,928.62 points. Standard & Poor’s 500 (.SPX) It lost 32.27 points, or 0.81%, to 3,941.48 points. And the Nasdaq (nineteenth) It fell 270.83 points, or 2.35%, to 11264.45 points.

Six of the S&P 500’s 11 major sectors ended the session in negative territory, with telecom services and consumer appreciation (.SPLRCD) which suffers the greatest losses.

Abercrombie & Fitch, a clothing retailer (ANF.N) It fell 28.6% after announcing a surprise quarterly loss and cutting annual sales forecasts and margins. Read more

Work from home dear Zoom Video Communications Inc (ZM.O) It jumped 5.6% after increasing full-year earnings due to strong corporate demand. Read more

Low issues outnumbered advanced issues on the New York Stock Exchange by 1.28 to 1; On the Nasdaq, the ratio was 2.37 to 1 in favor of declining stocks.

S&P 500 set three new highs in 52 weeks and 40 new lows; The Nasdaq recorded 17 new highs and 443 new lows.

Volume on US stock exchanges reached 11.78 billion shares, compared to an average of 13.33 billion over the last 20 trading days.

Stephen Kolb reports. Additional reporting by Devik Jain and Anisha Sircar in Bengaluru; Editing by Jonathan Otis

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