Sep 30, 2022
VOT Research Desk
Key Insights and Analysis
VIEW OF THE STOCK MARKET:
The risk-off mood on Wall Street led to a selloff in U.S. stocks on Thursday, with Apple’s shares falling nearly 5%. The S&P 500 fell 2.11 percent, while the Nasdaq 100 fell 2.86 percent.
A sign that traders and other speculators continue to lose strength every chance they get amid a complete lack of confidence in the market’s ability to sustain a rebound is the heavy losses that U.S. stocks suffered on Thursday as a result of risk-off sentiment.
The S&P 500 ended the day down 2.11 percent to 3,640, its lowest close since November 2020. Utilities and consumer discretionary led the sell-off, which saw all sectors finish in negative territory.
In the meantime, Apple’s massive fall dragged down the Nasdaq 100, which fell 2.86 percent to 11,165 and came within striking distance of retracing its June lows. Following reports that production was slowing as a result of a weaker demand profile, several sell-side analysts lowered their price target for the stock, which caused the maker of the iPhone’s shares to fall nearly 5%.
After U.S. economic data revealed that jobless claims for the week ending September 24 decreased by 16,000 to 193,000, the lowest level since April, stocks opened in the red. This indicates that the labor market continues to be extremely resilient.
Consumer spending will likely continue to rise and wage pressures will remain high if Corporate America does not begin cutting workers more quickly. This will make the Fed’s effort to control inflation by destroying demand more difficult. Because of this, risk assets may face a more hostile environment as a result of policymakers having to slam on the breaks even harder to cause a more pronounced slowdown.
The bearish bias and selling momentum on Wall Street were bolstered by comments made by a number of Fed members, including Loretta Mester and James Bullard. To provide some context, both officials maintained a tone that was extremely hawkish, indicating that the central bank is determined to restore price stability even at the cost of a painful recession.
U.S. stocks will continue to struggle in the near future due to the FOMC’s commitment to not prematurely transition to an easing stance and its unwavering commitment to bringing its policy posture to sufficiently restrictive levels. If businesses begin issuing negative profit guidance, as FedEx warned a few weeks ago, the sell-off could even get worse when the third-quarter earnings season begins in early October. This indicates that the S&P 500 and Nasdaq 100 may soon experience their next significant leg lower.
