Wall Street slumps on fresh talk of recession, S&P posts fourth drop

Wall Street slumps on fresh talk of recession, S&P posts fourth drop

  • Meta stumbles upon EU concern report over targeted ads
  • Energy stocks fall as crude trades at lowest level since January
  • Mirati slumps after disappointing trial data

Dec 6 (Reuters) – Wall Street closed lower on Tuesday, with the S&P 500 falling for the fourth consecutive session, as jittery investors worried about Federal Reserve rate hikes and still spoke of a looming recession.

Meta Platforms Inc (META.O), which slipped following reports that European Union regulators decided the company should not require users to accept personalized ads based on their digital activity , is one of the biggest drags on the S&P.

However, tech stocks generally suffered as investors were wary of high-growth companies that would perform poorly in a tough economy. It hit Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O) and Alphabet Inc (GOOGL.O) and sent the tech-heavy Nasdaq for a third straight session.

Most of the top 11 S&P sectors were down, with energy and communication services (.SPLRCL) joining technology (.SPLRCT) as the top laggards. Utilities (.SPLRCU), a defensive sector often favored in times of economic uncertainty, fared better.

Prospects for future economic growth were front and center on Tuesday after comments from financial titans pointing to uncertain times ahead.

Bank of America Corp chief executive predicted three quarters of slightly negative growth next year, while JPMorgan Chase and Co (JPM.N) CEO Jamie Dimon said inflation would erode the power of consumer buying and that a mild to more severe recession was likely to come.

Their comments follow recent views from BlackRock and others who believe aggressive monetary tightening by the US Federal Reserve to combat stubbornly high price increases could induce an economic slowdown in 2023.

“The market is very reactive right now,” said David Sadkin, president of Bel Air Investment Advisors.

He noted that while markets traditionally reflect the future, they are currently moving up and down based on the latest headlines.

Fears over economic growth come amid a reassessment by traders of the path future interest rate hikes will take, following strong employment and service sector data in recent days.

Money market bets indicate a 91% chance that the US central bank will raise rates by 50 basis points at its December 13-14 policy meeting, with rates expected to peak at 4.98% in May 2023 , compared to 4.92% estimated on Monday before the release of the services sector data.

The S&P 500 rose 13.8% in October and November on hopes of lower rate hikes and better-than-expected earnings, although expectations of slower rate hikes could be undermined by new data releases , including producer prices to be released on Friday.

“The market got ahead in late November, but then we got some good economic data, so people are reassessing what the Fed is going to do next week,” Bel Air’s Sadkin said.

According to preliminary data, the S&P 500 (.SPX) lost 57.05 points, or 1.43%, to end at 3,941.79 points, while the Nasdaq Composite (.IXIC) lost 225.01 points, or 1.99%, to 11,014.93. The Dow Jones Industrial Average (.DJI) fell 347.49 points, or 1.02%, to 33,599.61.

Nervousness over the direction of global growth also weighed on oil prices, with U.S. crude slipping to levels last seen in January, before Russia’s invasion of Ukraine disrupted supply markets. . The energy sector (.SPNY) fell on Tuesday.

Banks are among the most sensitive stocks to an economic downturn, as they potentially face the negative effects of bad debt or slowing loan growth. The S&P Banks Index (.SPXBK) was down, with Bank of America leading the decline.

Elsewhere, Mirati Therapeutics Inc (MRTX.O) slumped after the company announced disappointing data from early trials of its experimental cancer drug adagrasib.

Textron Inc (TXT.N) climbed after the US military awarded the contract for its next-generation helicopter to the company’s Bell unit.

Reporting by Devik Jain, Ankika Biswas and Johann M Cherian in Bengaluru and David French in New York; Editing by Vinay Dwivedi, Shounak Dasgupta and Lisa Shumaker

Our standards: The Thomson Reuters Trust Principles.

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