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All three major indexes set for sharp weekly losses
Costco slips after quarterly gross margins fall
Energy stocks slump on drop in U.S. crude prices
Sept 23 (Reuters) - Wall Street's main indexes all
tumbled to close well down on Friday, as rattled investors
continued to reposition themselves amid fears the U.S. Federal
Reserve's hawkish rate policy will help tip the American economy
The Dow narrowly avoided ending more than 20% lower
than its Jan. 4 record all-time closing peak of 36,799.64
points, meaning the blue-chip index did not attain a bear market
label, according to a widely used definition.
The S&P 500 and the Nasdaq are already in a
After enjoying hefty gains for last two years, Wall Street
has been rocked in 2022 by worries about a host of issues
including the Ukraine conflict, the energy crisis in Europe,
China's COVID-19 flare ups, and tightening financial conditions
across the globe.
A half dozen central banks, including in the United States,
Britain, Sweden, Switzerland and Norway, delivered rate hikes
this week to fight inflation, but it was the Fed's signal that
it expects high U.S. rates to last through 2023 that caught
markets off guard.
"There had been some optimists out there saying that
inflation may be coming under control but the Fed effectively
told them to sit down and shut up," said David Russell, VP of
market intelligence at TradeStation Group.
"The Fed is trying to rip the band-aid off, trying to kill
inflation while the jobs market is still strong."
Dire outlooks from a handful of companies have also added to
woes in a seasonally weak period for markets. Having withdrawn
its earnings forecast last week, FedEx Corp outlined on
Thursday cost cuts of up to $2.7 billion after falling demand
hammered first-quarter profits.
The delivery giant's stock slumped in Friday trading.
The S&P 500's estimated earnings growth for the third
quarter is at 4.6% down from 5% last week, according to
Goldman Sachs cut its year-end target for the benchmark S&P
500 index by about 16% to 3,600 points.
"We're having everyone reassess exactly how far the Fed will
go, and that's troubling for the economy," said Ed Moya, senior
market analyst at OANDA.
"It's becoming the base case scenario that this economy
is going to have a hard landing, and that is a terrible
environment for U.S. stocks."
According to preliminary data, the S&P 500 lost 62.49
points, or 1.69%, to end at 3,694.32 points, while the Nasdaq
Composite lost 193.70 points, or 1.75%, to 10,873.10.
The Dow Jones Industrial Average fell 473.55 points, or
1.57%, to 29,603.13.
All three indexes also recorded sharp weekly losses.
All the 11 major S&P sectors declined, led by a slide in
energy shares. Oil and gas-related stocks were pummeled
by the decline in crude prices, which fell in response to
concerns about demand in a recessionary environment and the
strong U.S. dollar.
Oilfield services were particularly hit, with Halliburton Co
, Schlumberger and Helmerich and Payne Inc
Rate-sensitive technology and growth stocks dropped with
Alphabet Inc, Apple Inc, Amazon.com,
Microsoft Corp and Tesla Inc all fell.
Shares of Costco Wholesale Corp dropped after the
big-box retailer reported a fall in its fourth-quarter profit
The CBOE volatility index, also known as Wall
Street's fear gauge, rose to a three-month high.
(Reporting by Ankika Biswas and Devik Jain in Bengaluru and
David French in New York; Editing by Marguerita Choy)