Wall Street hits a two-month low as concerns about the recession grow

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Last Updated on September 17, 2022 by Bitfinsider

US stocks ended the week in the negative on Friday (Sep 16), hitting two-month lows as investors fled to safety in response to FedEx’s warning of an imminent global downturn.

The S&P 500 closed below 3,900, a carefully watched support level, as all three of the major US stock indices dropped to lows not seen since mid-July.

The S&P 500 and the Nasdaq experienced their worst weekly percentage drops since June as they staggered through the finish line of a week that was shaken by inflation worries, impending interest rate hikes, and gloomy economic warning signs.

After FedEx Corp. withdrew its profit prediction late Thursday, citing signs of slowing global demand, risk-off sentiment increased from a simmer to a boil.

The World Bank and the IMF both made statements warning of an imminent global economic slump, which were followed by FedEx’s action.

A flood of conflicting economic data, led by a CPI report that was hotter than anticipated, solidified a rate increase of at least 75 basis points at the end of the Fed’s monetary policy meeting next week.

According to CME’s FedWatch tool, the financial markets have priced in an 18% chance of a massive, 100 basis point increase to the Fed funds target rate on Wednesday.

The Nasdaq Composite sank 103.95 points, or 0.9 percent, to 11,448.40 while the Dow Jones Industrial Average dropped 139.4 points, or 0.45%, to 30,822.42 and the S&P 500 dropped 28.02 points, or 0.72 percent, to 3,873.33.

Energy and industrials saw the biggest percentage drops, with nine of of the S&P 500’s key sectors finishing in the red.

Dow Transports, regarded as a gauge of the state of the economy, fell 5.1%.

That decline was spearheaded by FedEx shares, which plunged by 21.4%, the greatest decline in the S&P 500.

Peers United Parcel Service and XPO Logistics both experienced declines of 4.5% and 4.7%, while Amazon.com experienced a decline of 2.1%.

The session coincided with the expiration of monthly options, which takes place on the third Friday of each month. This year, market movements have been magnified by options-hedging activity, which has increased volatility.

The CBOE Market Volatility index, also known as “the fear index,” reached a two-month high, swiftly surpassing a level linked to increased investor apprehension.

On the New York Stock Exchange, declining issues outnumbered rising ones by a ratio of 3.04 to 1; on the Nasdaq, the ratio was 2.24 to 1.

The Nasdaq Composite registered 21 new highs and 387 new lows while the S&P 500 had no new 52-week highs and 56 new lows.

16.92 billion shares were traded on US exchanges, exceeding the 10.72 billion average for the entire session for the previous 20 trading days.

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