NEW YORK: Wall Street stocks tumbled on Monday (Dec 19) amid investor gloom as more experts predict a recession and markets await key economic data and earnings later in the week.
Market watchers pointed to continued worry over the effects of central bank interest rate hike following significant announcements last week from the Federal Reserve (Fed) and others.
More analysts also predict a drop in corporate earnings in the coming quarters.
The “baseline” forecast from Oxford Economics “now anticipates a global recession starting in Q4 2022 and comprising three straight quarters of negative per capita world GDP growth,” said a note from the advisory firm.
The note cited weakness in consumer confidence and the decline in asset prices as worrying signals. While the labour market remains “relatively robust”, the benchmark is a lagging indicator, Oxford said.
The gloomy outlook has dampened the odds for a “Santa Claus rally” that often takes place near the end of the year when trading volumes are scant, news flow is limited and investors are feeling festive.
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 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.
Large tech shares were generally lower, including Amazon, which fell 3.4% and Facebook parent Meta, which sank 4.1%.
The lack of big earnings reports or economic data on Monday 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.
“Investors have not necessarily changed their view in aggregate but those who have are driving the market right now and driving bigger changes in stock prices because of low trading volume,” she said. – AFP, Reuters