NEW YORK – Wall Street closed lower on Monday for a fourth straight session with Nasdaq leading declines as investors shied away from riskier bets, worried the Federal Reserve’s tightening campaign could push the US economy into a recession.
The three major US stock indexes have been under pressure since Wednesday, when Fed Chair Jerome Powell took a hawkish tone while the central bank raised interest rates. Powell promised further rate increases even as data showed signs of a weakening economy.
The S&P 500, the Dow Jones industrials and the Nasdaq have sold off sharply for December and are on track for their biggest annual declines since the 2008 financial crisis.
While US Treasury yields gained, investors ran from stocks, eyeing prospects of safer bets as they worried about the likelihood of a recession in 2023 according to Brian Overby, senior markets strategist at Ally.
“Investors are asking why do I want to take those risks going into 2023 with the Fed’s stance still aggressive when I can get such a good yield on the fixed income market place,” he said.
The lack of big earnings reports or economic data on Monday likely sharpened investors’ focus on economic fears and interest rates, according to Melissa Brown, Global Head of Applied Research at Qontigo in New York.
“It’s a knife edge between whether we’re going to teeter into a recession or have a soft landing. Is the Fed acting appropriately?“ said Brown who also noted that moves may be exaggerated as many investors take vacation around the end-of-year holidays.
The Dow Jones Industrial Average fell 162.92 points, or 0.49%, to 32,757.54, the S&P 500 lost 34.7 points, or 0.90%, to 3,817.66 and the Nasdaq Composite dropped 159.38 points, or 1.49%, to 10,546.03.
The biggest decliners among S&P industry sectors were communications services, which fell 2.2%, consumer discretionary, down 1.7% and technology, which lost 1.4%. Energy outperformed, closing up 0.13% as the sole industry out of 11 to manage a gain.
Market heavyweights such as Apple Inc, Microsoft Corp and Amazon.com Inc created some of the biggest drags on the market.
Trading in Tesla Inc was volatile with the electric carmaker closing down 0.24% after falling as much as 2.8% during the session. This was after a Twitter poll that showed a majority of respondents want Tesla Chief Executive Elon Musk to step down as CEO of the social media platform.
Meta Platforms shares finished down 4.1% after the European Commission said it could impose a fine of up to 10% of the tech conglomerate’s annual global turnover if evidence showed an infringement of the EU’s antitrust laws.
L3Harris Technologies Inc lost 3.6% after the US defence contractor said it would buy hypersonic engine manufacturer Aerojet Rocketdyne Holdings Inc for $4.7 billion. Aerojet added 1.3%.
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