U.S. stocks ended sharply lower on Thursday, with the S&P 500 sliding to another 2022 low, while heavy losses for Apple Inc. and other tech-related stocks helped set the tone as stocks rallied. reversed the rebound from the previous session.
How the stocks traded
The Dow Jones Industrial Average DJIA,
fell 458.13 points, or 1.5%, to close at 29,225.61, after falling 686 points to a session low.
The S&P 500 SPX,
fell 78.57 points, or 2.1%, to end at 3,640.47 – its lowest close since Nov. 30, 2020.
The Nasdaq Composite COMP,
fell 314.13 points, or 2.8%, to end at 10,737.50.
Stocks erased gains on Wednesday, when the Dow rose 549 points for its biggest percentage point gain since July, while the S&P 500 and Nasdaq posted their biggest gains in more than a month.
What drives the markets?
A batch of economic data that bolstered expectations that the Federal Reserve will continue its aggressive rate-hike pace set the tone, analysts said, while a sharp sell-off in tech-related stocks amplified the damage.
The latest update to second-quarter GDP figures confirmed that the US economy contracted at an annualized rate of 0.6% in the second quarter. However, a weekly report on jobless claims in the United States found that the number of Americans initially claiming jobless benefits fell by 16,000 to 193,000 in the week ended September 24, the lowest level since April.
The jobless claims data helped weigh on equities by bolstering the view that the Fed will stick to its plans to keep raising interest rates.
“I think we’ll see rates continue to rise here in the United States, since we’re not in restrictive territory yet, and rate cuts won’t happen as easily or as soon as the market expects them to,” he said. said Michael Wang, CEO and founder of Prometheus Alternative Investments, told MarketWatch.
“Expect further tightening from central banks, including the Fed, as markets seek stability and transparency for the rest of the year, which will impact the upcoming earnings season. Investors will be watching whether [Fed Chair Jerome] Powell and the Fed are sticking to their guns to raise rates regardless of the short-term impact to get inflation under control,” he said.
Treasury yields rebounded, putting pressure on stocks. A pullback in global yields following the Bank of England’s decision to resume its bond-buying program in an effort to stabilize the country’s bond market has been credited with giving stocks a chance to rebound Wednesday.
Apple Inc. AAPL, a component of the Dow Jones, was blamed for helping to exacerbate weakness in stocks on Thursday, while also contributing strongly to the Nasdaq’s decline. Shares fell 4.9% after the Bank of America analyst downgraded the stock to neutral from long on Thursday, writing that demand trends could worsen ahead of the new exercise.
“Megacap tech stocks were hit hard after Apple received an extraordinarily rare downgrade from Bank of America. The downgrade underscored the risk of lower demand for services and products given the current macroeconomic environment,” Edward Moya, senior market analyst at Oanda, said in a note.
Parent Facebook Meta Platforms Inc.
fell 3.7% after a news report said the company was planning a hiring freeze and restructuring.
“Meta’s outlook is in shambles as they envision a dire macro backdrop that will lead to lower ad counts and a Metaverse bet that doesn’t appear to materialize,” Moya said.
The tech rout saw nearly a fifth of the S&P 500 hit 52-week lows in Thursday’s session.
Cleveland Fed President Loretta Mester said in an interview with CNBC that interest rates in the United States have not yet reached restrictive territory and the Fed has not yet reached a point where it should consider suspending rate hikes.
St. Louis Fed President James Bullard has defended the Fed against claims that its policy of aggressive interest rate hikes is creating impossible conditions for foreign central banks.
See: Fed rate hikes didn’t surprise foreign central banks, Bullard says
San Francisco Fed President Mary Daly was scheduled to speak at an event at 4:45 p.m. ET.
Actions in the spotlight
shares fell 0.6% after the company announced on Wednesday that it was increasing its quarterly dividend to 53 cents per share.
Shares fell 24.6%, making it the worst performer in the S&P 500, following weak earnings and a warning about falling consumer demand for discretionary buying.
General Motors Co.
down 5.6%, and Tesla Inc.
down 6.8%, also fell in tandem with CarMax as the company’s consumer spending warning weighed on automakers and their suppliers.
shares fell 2.7% after the company announced plans to raise employee pay.
Bed Bath and Beyond Inc.
fell 4.2% on Thursday after the homewares retailer reported a much larger-than-expected second-quarter fiscal loss, but showed ‘accelerated margins’ helped improve the surplus. stocks.
— Joseph Adinolfi and Jamie Chisholm contributed to this article.