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Wall St slips in choppy trading on rising recession worries

12/07/2022 | 02:38pm EST

(For a Reuters live blog on U.S., UK and European stock markets, click or type LIVE/ in a news window)

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Apple down after Morgan Stanley cuts Dec shipment target

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Tesla falls on production loss worries

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Indexes down: Dow 0.07%, S&P 0.25%, Nasdaq 0.5%

Dec 7 (Reuters) - Wall Street's main indexes struggled for direction on Wednesday, bouncing around in choppy trading as investors weighed potential recession fears linked to the pace of the Federal Reserve's monetary policy tightening and its effects on corporate America.

The benchmark S&P 500 fell for the fifth straight session on Wednesday.

The Nasdaq was down for the fourth straight session, dragged lower by a 1.3% drop in Apple Inc on Morgan Stanley's iPhone shipment target cut and a 3.5% fall in Tesla Inc over production loss worries.

Markets have also been rattled by downbeat comments from top executives at Goldman Sachs Group Inc, JPMorgan Chase & Co and Bank of America Corp on Tuesday that a mild to more pronounced recession was likely ahead.

Fears that the U.S. central bank might stick to a longer rate-hike cycle have intensified recently in the wake of strong jobs and service-sector reports.

More economic data, including weekly jobless claims, producer price index and the University of Michigan's consumer sentiment survey this week, will be on the watch list for clues on what to expect from the Fed on Dec. 14.

"When they (investors) take a look at what earnings estimates are for the remainder of 2022 and for 2023, they have not considered a recession in 2023," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

"There's some adjustment to what earnings estimates will be over the next 12 months and I think that's what's providing a little bit of pressure to the markets."

The CBOE volatility index, also known as Wall Street's fear gauge, rose to a two-week high before slipping back slightly.

Money market participants see a 91% chance that the Fed will increase its key benchmark rate by 50 basis points in December to 4.25%-4.50%, with rates peaking in May 2023 at 4.93%.

By 2:21 p.m. ET (1921 GMT), the Dow Jones Industrial Average fell 23.81 points, or 0.07%, to 33,572.53, the S&P 500 lost 9.85 points, or 0.25%, to 3,931.41 and the Nasdaq Composite dropped 54.80 points, or 0.5%, to 10,960.09.

Concerns about a steep rise in borrowing costs have boosted the dollar, but dented demand for risk assets such as equities this year. The S&P 500 is on track to snap a three-year winning streak, down 17.5% so far in 2022.

Four out of 11 major S&P sector indexes were higher, with healthcare shares leading the pack, while technology and communication services stocks were among the worst performers.

Energy fell 0.6% and was on course for its fifth straight decline. The sector's performance was weighed by U.S. crude prices falling again, at one point trading at its lowest intraday level since late December 2021.

Carvana Co was down 40.1% after Wedbush downgraded the used-car retailer's stock to "underperform" from "neutral" and slashed its price target to $1.

Meanwhile, United Airlines traded 2.5% lower. Unions representing various workers at the airline said they would join forces on contract negotiations.

Travel-related stocks were generally down. Delta Air Lines and American Airlines Group were 3% and 4.1% lower respectively, with cruise line operators Carnival Corp and Norwegian Cruise Line Holdings and accommodation-linked Airbnb Inc and Booking Holdings all falling between 1.5% and 3.7%. (Reporting by Shubham Batra, Ankika Biswas, Johann M Cherian and Shashwat Chauhan in Bengaluru and David French in New York; Editing by Vinay Dwivedi, Shounak Dasgupta and Lisa Shumaker)


ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AIRBNB, INC. -5.57% 109.48 Delayed Quote.28.05%
AMERICAN AIRLINES GROUP INC. -2.86% 15.96 Delayed Quote.25.47%
APPLE INC. -2.01% 143 Delayed Quote.10.06%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.74% 0.70047 Delayed Quote.4.32%
BANK OF AMERICA CORPORATION -0.42% 35.3 Delayed Quote.6.58%
BOOKING HOLDINGS INC. -1.12% 2436.98 Delayed Quote.20.93%
BRITISH POUND / US DOLLAR (GBP/USD) -0.31% 1.23117 Delayed Quote.2.52%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.58% 0.7426 Delayed Quote.1.78%
CARVANA CO. 28.70% 10 Delayed Quote.110.97%
DELTA AIR LINES, INC. -0.85% 38.4 Delayed Quote.16.86%
DOW JONES INDUSTRIAL -0.77% 33717.09 Real-time Quote.2.51%
EURO / US DOLLAR (EUR/USD) -0.33% 1.0815 Delayed Quote.1.57%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.72% 0.012189 Delayed Quote.1.48%
MORGAN STANLEY -0.93% 95.96 Delayed Quote.13.93%
NASDAQ COMPOSITE -1.96% 11393.81 Real-time Quote.8.86%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -0.70% 0.64225 Delayed Quote.2.22%
NORWEGIAN CRUISE LINE HOLDINGS LTD. -1.13% 14.84 Delayed Quote.21.24%
TESLA, INC. -6.32% 166.66 Delayed Quote.44.42%
THE GOLDMAN SACHS GROUP, INC. 1.06% 357.46 Delayed Quote.4.10%
UNITED AIRLINES HOLDINGS, INC. -1.07% 48.21 Delayed Quote.27.88%
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