US stocks fall on recession fears, Nasdaq closes at new bear market low – Reuters

US stocks fall on recession fears, Nasdaq closes at new bear market low - Reuters
  • Tesla gains 3.3% in choppy trading
  • Southwest Airlines drops 5.2% under government scrutiny
  • Indexes down: Dow 1.1%, S&P 500 1.20%, Nasdaq 1.35%

December 28 (Reuters) – Wall Street’s major indices finished weaker on Wednesday, with the Nasdaq hitting a 2022 low as investors grappled with mixed economic data, rising COVID cases in China and geopolitical tensions heading into 2023.

The Nasdaq Composite (.IXIC) ended at 10,213,288, the lowest since the start of the bear market in November 2021, after the index hit an all-time high. The last time the Nasdaq ended lower was in July 2020. The previous low for 2022 was 10,321,388 on October 14.

“There was no Santa rally this year. The Grinch appeared to investors in December,” said Greg Bassuk, CEO of AXS Investments in Port Chester, New York.

December is typically a strong month for equities, with a rally the week after Christmas. The S&P 500 index (.SPX) has only posted December 18 losses since 1950, Truist Advisory Services data shows.

“Normally, a Santa Claus Rally is fueled by the hope of factors that will drive economic and market growth,” Bassuk said. “The negative and mixed economic data, the heightened concerns about the re-emergence of COVID and the ongoing geopolitical tensions and… all of that, including the translation of the Fed’s policies, are all preventing Santa Claus from showing up at the end of this year. ”

All 11 of the S&P 500 (.SPX) Sector indices fell on Wednesday. Energy stocks (.SPNY) were the biggest losers, falling more than 2.2% as demand concerns in China weighed on oil prices.

Investors have been assessing China’s move to reopen its COVID-battered economy as infections surged.

“With this current combination of rising cases with an opening up of Chinese restrictions, we see investors concerned that the impact will spread across many different industries and sectors, just as it did in the earlier COVID period,” Bassuk said.

The benchmark S&P 500 (.SPX) is down 20% year-to-date, en route to its biggest annual loss since the 2008 financial crisis. The defeat was more severe for the tech-heavy Nasdaq Composite (.IXIC)which closed at its lowest level since July 2020.

While recent data pointing to a reduction in inflationary pressures has bolstered hopes of smaller rate hikes by the Federal Reserve, a tight labor market and resilient US economy have raised concerns that interest rates could remain high for longer.

Markets are now counting on a 69% chance of a 25 basis point rate hike at the Federal Reserve meeting in February and see interest rates peak at 4.94% in the first half of next year. .

Shares of Tesla Inc (TSLA.O) gained 3.3% in choppy trading, one day after reaching its lowest level in more than two years. The stock is down nearly 69% this year.

Southwest Airlines Co (LUV.N) fell 5.2% a day after the airline came under fire from the US government for canceling thousands of flights.

Apple inc (AAPL.O)Alphabet Inc (GOOGL.O) and Amazon.com Inc (AMZN.O) fell between 1.5% and 3.1% as US 10-year Treasury yields recovered from a brief decline and rose for a third straight.

The Dow Jones Industrial Average (.DJI) fell 365.85 points, or 1.1%, to 32,875.71; the S&P 500 (.SPX) lost 46.03 points, or 1.20%, at 3,783.22; and the Nasdaq Composite (.IXIC) fell 139.94 points, or 1.35%, to 10,213.29.

Falling issues outpaced advances on the NYSE by a ratio of 3.77 to 1; on Nasdaq, a ratio of 1.97 to 1 favored the fallers.

The S&P 500 posted seven new highs in 52 weeks and seven new lows; the Nasdaq Composite recorded 75 new highs and 421 new lows.

Volume on US exchanges was 8.59 billion shares, compared to the full-session average of 11.3 billion over the past 20 trading days.

Reporting by Echo Wang in New York; Additional reporting by Amruta Khandekar and Ankika Biswas in Bengaluru; Edited by Sriraj Kalluvila, Anil D’Silva and Richard Chang

Our standards: The Thomson Reuters Principles of Trust.

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