The three major US stock indexes had ugly closes Friday to finish off a disastrous September. Heavy losses were notched on the week, month and quarter. For the September quarter the S&P 500 fell 5.3%. The Nasdaq dropped 4.1%, and the Dow lost 6.7%. It was the first time the S&P 500 and the Nasdaq have had three consecutive quarterly losses since 2009. It was the first time the Dow faced three straight quarterly losses since 2015. The S&P 500 saw a new 2022 low falling to 3,585.62 with at least 53 stocks in the S&P 500 recording new 52-week lows during Friday afternoon trading.
The Dow Jones Industrial Average fell 500.10 points Friday, closing below 29,000 for the first time since November 2020 at 28,725.51. The Nasdaq Composite was 1.51% lower, ending the day at 10,575.62. The Nasdaq Composite closed 1.51% lower to end at 10,575.62. For September, the Dow tumbled 8.8%, while the S&P 500 fell 9.3%. The Nasdaq lost 10.5%. For the week the S&P 500 and the Dow lost 2.9% while the Nasdaq dropped nearly 2.7%.
When Risk Explodes:
Sentiment is cruelled with inflation soaring as commodity prices hit 40-year highs, the yield on the benchmark 10-year Treasury traded over 4.0% in the last week of September and the average for a 30-year fixed-rate mortgage hit the highest since 2007 at 6.7%. Well above the 3.11% recorded near the start of the year. These higher yields have hurt tech and growth stocks in particular, making shares of firms whose profits may lie further out in time less attractive.
Out of 11 sectors in the S&P 500 only two were green in the third quarter, Consumer discretionary +3.62% and Energy +0.71%, after being up well over 20% at one stage.
The Tech Wreck Has Been Travelling Down Fast
H1 2022 was brutal for many tech heavies, with the one bright spot solar as the US government subsidizes energy transition to alternative energy with natural gas and coal prices soaring.
Friday saw more selling to finish off the quarter as the inflation report closely watched by the Federal Reserve, Core PCE prices in the US, which exclude food and energy, rose 0.6% month-over-month in August of 2022, above market expectations of a 0.5% rise. Core PCE unexpectedly rose to 4.9% from upwardly revised 4.7 percent in the prior month and expectations of 4.7. Federal Reserve Governor Chairman Powell reminded us at the FOMC that the Fed’s key influence or measure for inflation is the core PCE index. Food prices increased 12.4 percent and energy prices increased 24.7 percent over the year.
In a speech on Friday Fed Vice Chair Lael Brainard again underscored the need to bring down inflation, saying the central bank is “committed to avoiding pulling back prematurely” on restrictive monetary policy.
The energy and materials sectors, which had been standouts for t stock markets in 2022 had sharp pullbacks in September.
Stock Indices Among Worse Performing Futures in Q2 2022, VIX Oil among the Best
53 S&P 500 stocks fall to fresh lows on Friday alone to close out the week, month and quarter
- Comcast (CMCSA) trading at lows not seen since May, 2016
- AT&T (T) trading at lows not seen since Apr, 2003
- Verizon (VZ) trading at lows not seen since Aug, 2015
- Advance Auto Parts (AAP) trading at lows not seen since Feb, 2021
- Best Buy (BBY) trading at lows not seen since Apr, 2020
- Carnival (CCL) trading at lows not seen since Oct, 1992
- Caesars Entertainment (CZR) trading at lows not seen since Aug, 2020
- eBay (EBAY) trading at lows not seen since Apr, 2020
- Garmin (GRMN) trading at lows not seen since May, 2020
- CarMax (KMX) trading at lows not seen since Apr, 2020
- Nike (NKE) trading at lows not seen since Apr, 2020
- PVH Corp. (PVH) trading at lows not seen since July, 2020
- Ralph Lauren (RL) trading at lows not seen since Nov, 2020
- VF Corp. (VFC) trading at lows not seen since Oct, 2011
- Whirlpool (WHR) trading at lows not seen since July, 2020
- Church & Dwight (CHD) trading at lows not seen since June, 2020
- Colgate-Palmolive (CL) trading at lows not seen since June, 2020
- Estee Lauder (EL) trading at lows not seen since Oct, 2020
- Kimberly-Clark (KMB) trading at lows not seen since Mar, 2020
The FAANG stocks, consisting of the popular quintet of Facebook parent Meta Platforms, Apple, Amazon.com, Netflix and Google parent Alphabet, have lost $trillions combined in market value this year.
- Dow Jones Industrial Average: -21.0% YTD
- S&P Midcap 400: -22.5% YTD
- S&P 500: -24.8% YTD
- Russell 2000: -25.9% YTD
- Nasdaq Composite: -32.4% YTD
Major US Indices YTD 2022
They realization of risk and overvalued stocks took a while as the market has lived in denial but the Federal Reserve raising interest rates, soaring inflation and the slovenly economy has brought stocks sharply lower from the record levels they started the year. The most recent earnings season has been dotted with some high-profile casualties, delivering head-spinning one-day crashes following the reports.
From The Traders Community Research Desk