U.S. shares drop on recession fears, Nasdaq closes at new bear market low

Dec 28 (Reuters) – Wall Road’s predominant indexes ended weaker on Wednesday, with the Nasdaq hitting a 2022 closing low, as traders grappled with combined financial information, rising COVID circumstances in China, and geopolitical tensions heading into 2023.

The Nasdaq Composite (.IXIC) ended at 10,213.288, the bottom for the reason that bear market started in November 2021 after the index hit a document excessive. The final time the Nasdaq ended decrease was in July 2020. Its earlier closing low for 2022 was 10,321.388 on Oct. 14.

“There was no Santa rally this yr. The Grinch confirmed up this December for traders,” stated Greg Bassuk, chief government at AXS Investments in Port Chester, New York.

December is usually a robust month for equities, with a rally within the week after Christmas. The S&P 500 index (.SPX) has posted solely 18 Decembers with losses since 1950, Truist Advisory Companies information present.

“Usually a Santa Claus Rally is sparked by hopes of things that can drive financial and market development,” Bassuk stated. “The destructive and combined financial information, better considerations round COVID reemergence and ongoing geopolitical tensions and … all of that additionally translating Fed coverage is all impeding Santa (from) exhibiting up on the finish of this yr.”

All 11 of the S&P 500 (.SPX) sector indexes fell on Wednesday. Power shares (.SPNY) had been the most important losers, dipping over 2.2% as worries over demand in China weighed on oil costs.

Traders have been assessing China’s transfer to reopen its COVID-battered economic system as infections surged.

“With this present mixture of rising circumstances with a gap up of China restrictions, we’re seeing that traders are involved that the ramifications are going to unfold by way of many various industries and sectors because it did within the earlier COVID interval,” Bassuk stated.

The benchmark S&P 500 (.SPX) is down 20% year-to-date, on observe for its largest annual loss for the reason that monetary disaster of 2008. The rout has been extra extreme for the tech-heavy Nasdaq Composite (.IXIC), which closed on the lowest stage since July 2020.

Whereas latest information pointing to an easing in inflationary pressures has bolstered hopes of smaller rate of interest hikes by the Federal Reserve, a good labor market and resilient American economic system have spurred worries that charges might keep greater for longer.

Markets are actually pricing in 69% odds of a 25-basis level price hike on the U.S. central financial institution’s February assembly and see charges peaking at 4.94% within the first half of subsequent yr. .

Shares of Tesla Inc (TSLA.O) gained 3.3% in uneven commerce, a day after hitting the bottom stage in additional than two years. The inventory is down practically 69% for the yr.

Southwest Airways Co (LUV.N) dropped 5.2% a day after the provider got here beneath hearth from the U.S. authorities for canceling hundreds of flights.

Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O) and Amazon.com Inc (AMZN.O) fell between 1.5% and three.1% because the U.S. 10-year Treasury yield recovered from a quick fall to rise for a 3rd straight session.

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

Declining points outnumbered advancers on the NYSE by a 3.77-to-1 ratio; on Nasdaq, a 1.97-to-1 ratio favored decliners.

The S&P 500 posted seven new 52-week highs and 7 new lows; the Nasdaq Composite recorded 75 new highs and 421 new lows.

Quantity on U.S. exchanges was 8.59 billion shares, in contrast with the 11.3 billion common for the complete session during the last 20 buying and selling days.

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

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