NEW YORK: Wall Street stocks fell again on Thursday (Sept 33) amid growing recession fears as more central banks raised interest rates and following the Federal Reserve’s latest aggressive move to counter surging inflation.
The Bank of England on Thursday announced its second consecutive half-point rate increase and warned the British economy was slipping into recession. Others to tighten the screws include the European, Swiss and Norwegian central banks.
Losses on New York followed drops of nearly 2% on Wednesday after the Fed announcement of another super-sized rate increase, and came on the heels of declines earlier Thursday in most overseas bourses.
“Global equities are struggling as the world anticipates surging rates will trigger a much sooner and possibly severe global recession,” said Oanda’s Edward Moya.
The Dow Jones Industrial Average fell 107.1 points, or 0.35%, to 30,076.68, the S&P 500 lost 31.94 points, or 0.84%, to 3,757.99 and the Nasdaq Composite dropped 153.39 points, or 1.37%, to 11,066.81.
“If we continue to have sticky inflation, and if (Fed chair Jerome) Powell sticks to his guns as he indicates, I think we enter recession and we see significant drawdown on earnings expectations,” said Mike Mullaney, director of global markets at Boston Partners.
“If this happens, I have high conviction under those conditions that we break 3,636,” he added, referring to the S&P 500’s mid-June low, its weakest point of the year.
Among individual companies, Tesla shares fell 4.1% as it recalled 1.1 million vehicles due to a defect with the automatic window system that poses risks of pinching a driver’s finger.
FedEx climbed 0.8% as it announced plans to cut up to US$2.7 billion in spending in the wake of a slowdown in demand.
Major US airlines – which have enjoyed a rebound amid increased travel as pandemic restrictions end – were also down, with United Airlines and American Airlines falling 4.6% and 3.9% respectively. This took losses in the last three days to 11% for United and 10.6% for American.
JetBlue Airways Corp, off 7.1% and also recording a third straight loss, closed at its lowest level since March 2020. – AFP, Reuters
