U.S. stocks fell on Thursday – with Apple leading – as renewed recessionary jitters permeated Wall Street and erased gains from a fleeting relief rebound in the previous session.
The S&P 500 fell 2.1% to a new low in 2022, while the Dow Jones Industrial Average erased more than 450 points, or about 1.5%. The Nasdaq Composite fell 2.8%.
Tech stocks led the decline as heavily weighted Apple (AAPL) shares shed around 5% on concerns over falling demand that prompted Bank of America to downgrade. Analysts warned in a note released Thursday that BofA’s research team “expects the demand trajectory to deteriorate.”
A Bloomberg report also revealed that one of Apple’s top executives was leaving the company after appearing in a viral TikTok video making an off-color joke.
Apple’s declines began on Wednesday following a report that the tech giant is scrapping plans to ramp up production of its new iPhones this year after demand for the product failed to meet expectations. expectations.
Elsewhere in company news, Meta Platforms (META) announced plans to restructure teams and downsize for the first time in the company’s history, telling staff that “the macro economy remains challenging and volatile”. The shares closed down 3.7%.
Shares of CarMax (KMX) also fell nearly 25% after the vehicle buyer reported second-quarter earnings that missed Wall Street estimates, citing “affordability challenges” that weighed on the sales.
And Bed Bath & Beyond (BBBY) fell 4% on Thursday after the company posted a bigger quarterly loss as lingering merchandising and inventory issues and inflationary pressures hit the housewares retailer.
On the economic data front, initial jobless claims fell to 193,000, the lowest since April, in the week ended September 24, from a lower-revised 213,000 the previous week, the department said Thursday. work. Economists have called for 215,000 claims, according to consensus estimates compiled by Bloomberg.
Elsewhere, a third Commerce Department reading of gross domestic product (GDP) showed US economic activity contracted at an annualized rate of 0.6%.
Renewed risk aversion in the market puts the three major averages on pace to give up most of the gains made after England’s central bank announced on Wednesday it would resume bond buying to help to stabilize the financial and monetary markets. Investors celebrated the move away from aggressive policy tightening by authorities over the past few months. The S&P 500, Dow and Nasdaq each rose about 2%.
EY Parthenon chief economist Gregory Daco said in a note that the “lack of good policy coordination and the speed and timing of rate hikes” risk “an excessive and disorderly tightening of financial conditions”.
“In the UK, the economic outlook has recently deteriorated with the release of Prime Minister Liz Truss’ budget, leading to a market rout, with Treasury yields hitting their highest level since 2010 and the pound sterling plunging to its lowest point. lowest level in 37 years,” Daco said.
Following the Bank of England’s intervention on Wednesday – the purchase of around 65 billion pounds, or about $69 million, of long-term gilts – UK 30-year bond yields fell 100 basis points. base after hitting a two-decade high.
In the United States on Thursday, Treasury yields rose after rising – then falling – at the fastest pace in decades. On Wednesday, the benchmark 10-year Treasury note – a crucial economic benchmark – briefly hit 4%, taking a major step amid the worst bond sell-off since 1949.
Atlanta Fed President Raphael Bostic said on Wednesday that the decision of his central bank peers across the Atlantic to return to bond buying did not change his view on policy. the U.S. Federal Reserve nor stoked fears that England’s economic failings would reverberate.
“I would expect growth to be below trend, we would start to see demand for a wider range of products start to weaken, and we would start to see labor markets start to be more streamlined” , Bostic said, adding that if job postings drop substantially, officials may consider stopping and holding at that level.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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