- Apple fell after Morgan Stanley cut its December shipment target
- Tesla falls on concerns of production losses
Dec 7 (Reuters) – Wall Street’s main indexes ended sharply lower on Wednesday, after a choppy session in which investors struggled to grasp a clear direction as they weighed how the tightening of monetary policy by the Federal Reserve could feed into American companies.
The benchmark S&P 500 (.SPX) fell for a fifth straight session, while the Nasdaq (.IXIC) fell for a fourth straight session.
The Nasdaq was dragged down by a drop in Apple Inc ( AAPL.O ) on Morgan Stanley’s iPhone shipment target cut and a drop in Tesla Inc ( .IXIC ) on concerns of production loss.
Markets were also hit by unfavorable comments from top executives at Goldman Sachs Group Inc ( GS.N ), JPMorgan Chase & Co ( JPM.N ) and Bank of America Corp ( BAC.N ) on Tuesday that a mild recession in more pronounced was probably ahead.
Fears that the US central bank will stick to a longer rate hike cycle have intensified recently on the back of strong employment and services sector reports.
More economic data, including weekly jobless claims, the producer price index and the University of Michigan consumer sentiment survey this week, will be on the watch list for clues about what to expect from the Fed on December 14.
“We seem to be in this very uncertain period where investors are trying to figure out what’s more important as policymakers are slowing rates, but the data is not playing,” said Craig Erlam, senior market analyst at OANDA .
“The market is trying to balance the headwinds and headwinds and that’s causing some confusion.”
The CBOE Volatility Index (.VIX), also known as Wall Street’s fear gauge, rose to a two-week high before retreating slightly.
Money market participants see a 91% chance the Fed will raise its key benchmark rate by 50 basis points in December to 4.25%-4.50%, with rates peaking in May 2023 to 4, 93%
According to preliminary data, the S&P 500 (.SPX) lost 6.63 points, or 0.17%, to end at 3,934.63, while the Nasdaq Composite (.IXIC) shed 54.77 points, or a 0.50%, up to 10,960.12. The Dow Jones Industrial Average (.DJI) fell 8.30 points, or 0.02%, to 33,588.04.
Worries about a sharp rise in borrowing costs have boosted the dollar, but have hurt demand for risk assets such as stocks this year. The S&P 500 is on track to end a three-year winning streak.
Few of the 11 major S&P sector indexes were higher, with health care (.SPXHC) one of them. Technology (.SPLRCT) and communication services (.SPLRCL) were among the worst performers.
Energy (.SPNY) fell for its fifth straight session. The sector’s performance was weighed down by falling US crude prices again, which hit their lowest level in 2022 as worries about the outlook for global growth wiped out all gains since the invasion of Ukraine exacerbated the world’s worst energy supply crisis in decades.
Carvana Co ( CVNA.N ) lost nearly half its share value after Wedbush downgraded the used car retailer’s stock to “underperform” from “neutral” and cut its price target to $1.
Meanwhile, United Airlines ( UAL.O ) traded lower. Unions representing several airline workers said they would join forces in contract negotiations.
Travel-related stocks were down overall. Delta Air Lines ( DAL.N ) and American Airlines Group ( AAL.O ) were lower, as were cruise line operators Carnival Corp ( CCL.N ) and Norwegian Cruise Line Holdings ( NCLH.N ) and Airbnb Inc (ABNB) linked to accommodation. .O) and Reserva Holdings (BKNG.O).
Reporting by Shubham Batra, Ankika Biswas, Johann M Cherian and Shashwat Chauhan in Bangalore and David French in New York; Editing by Vinay Dwivedi, Shounak Dasgupta and Lisa Shumaker
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