S&P 500 and Nasdaq Indices Fall for 5th Consecutive Day
IMF downgrades global growth forecast for next year
New York stocks closed mixed on fears of a recession next year.
At the New York Stock Exchange (NYSE) on the 11th (Eastern time), the Dow Jones Industrial Average closed at 29,239.19, up 36.31 points (0.12%) from the previous day.
The Standard & Poor’s (S&P) 500 index dropped 23.55 points (0.65%) to 3,588.84, and the Nasdaq index, centered on technology stocks, closed at 10,426.19, down 115.91 points (1.10%) from the battlefield. The S&P 500 and Nasdaq were down for the fifth consecutive day.
Investors watched government bond yields ahead of corporate quarterly earnings releases and the Consumer Price Index (CPI). The 10-year U.S. Treasury yield crossed 4% for the first time since the 28th of last month. The two-year bond yield, which is sensitive to monetary policy, traded around 4.3%, similar to the previous day.
As the International Monetary Fund (IMF) lowered its global growth forecast for next year, investors’ attention was focused on concerns about an economic slowdown. The International Monetary Fund (IMF) lowered its global economic growth forecast for next year from 2.9% to 2.7%, reflecting inflation, austerity fiscal policy, and COVID-19. The growth forecast for this year was maintained at 3.2%, the same as before. The US growth forecast for this year has been lowered by 0.7 percentage points from the previous 2.3% to 1.6%, and the growth forecast for next year is expected to remain the same as 1.0%.
Concerns persisted that the Fed’s intensive tightening policy amid concerns over a recession could go beyond a slowdown in the economy and undermine financial stability.
Cleveland Fed President Loretta Mester said at an event today that the risk of the Fed tightening too little is greater than the risk of tightening too much. “Monetary policy is moving to constraint levels and needs to remain constrained for the time being to keep inflation back to its 2% target,” he said.
Mester said his forecast for rates for next year is slightly higher than the median of the Fed (4.5% to 4.75%). According to the Chicago Mercantile Exchange (CME) FedWatch, there is an 80% chance that the Fed will raise rates by 0.75 percentage points in November and a 20% chance of a 0.50 percentage point increase in the Federal Funds (FF) interest rate futures market.
Investors are also watching companies report their third-quarter earnings. According to Refinitiv data, the quarterly net profit growth rate of companies listed on the S&P 500 in the third quarter was 5.2%, down from the 10.6% forecast three months ago.
Shares of American Airlines rose 1.7% on expectations of better-than-expected third-quarter earnings. Meta’s share price fell 4% on news that Russia included Meta on its list of organizations involved in terrorism and the far-right.
Shares of Lyft and Uber fell more than 12% and more than 10%, respectively, on the news that the US Department of Labor had issued proposals to reclassify gig workers as employees rather than independent contractors. DoorDash shares fell 6%.
The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) rose 1.18 points (3.64%) to 33.63.
Chae Seon-hee, reporter at Hankyung.com [email protected]