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Trackinsight: Wall Street plunges as recession fears mount

09/26/2022 | 12:00pm EST

Market review for the week from 19 to 25 September 2022.

U.S. stocks plummeted and government bond yields soared again, as investors are increasingly concerned about the growing threat of a deep recession (see the Fixed Income market review of last week). Fears have intensified after the Federal Reserve raised rates by 0.75% this week and revised its year-end rate upwards to 4.4%, from 3.4% three months ago, signaling super-sized hikes ahead “even if it requires more economic pain.”

The S&P 500 nosedived by almost 4.65% over the week to close at its lowest level (3,693.23) since June, bringing its year-to-date performance to -22.51%. The tech-heavy Nasdaq similarly sank 5.07%, plunging deeper into bear market territory (-30.53% YTD). The Dow Jones Industrial Average fell 4% week-over-week, or 1,232 points at 29,590.41 (-18.57% YTD).

Unsurprisingly, European stocks endured the worst week since early March with the MSCI EMU down 4.69% (-23.24% YTD) amid heightened geological tensions. Russia has just announced the partial mobilization of 300,000 military reservists Wednesday, after several battlefield setbacks in Ukraine, while Europe’s energy crisis has taken a turn for the worse. 

Asian markets fell in unison, though to a lesser extent. The Shanghai Composite slid 1.22% (-15.15% YTD). China is easing COVID lockdowns. Japan’s Nikkei shed 1.50% (-5.69% YTD).

Selloff across the board   

For the seventh time this year, a sea of red washed over all the S&P sectors. Energy was the hardest hit (-9%) by a surge in the dollar and worries that a deeper global recession may hurt oil demand. The price of a barrel of West Texas Intermediate tanked 7.45% to a nine-month low of $78.74. Consumer discretionary stocks were also one of the biggest drags (-7.02%) on the broader market, weighed down by Tesla (-9.24%). By contrast, defensive sectors such as health care (-3.38%), utilities (-3.05%), and consumer staples (-2.15%) outperformed the broad market. Ditto for information technology (-3.59%) as Apple stocks weathered the storm, edging down 0.18%. Ming-Chi Kuo, known as “the analyst who reveals all of Apple’s secrets,” said that the strong demand for iPhone 14 Pro models could help boost Apple’s revenue.

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ę www.trackinsight.com 2022
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