NEW YORK: Wall Street stocks fell sharply on Thursday (Dec 15) after lacklustre retail sales data, amid fears that central bank interest rate increases will prompt a global recession.
The Dow Jones Industrial Average fell 764.13 points, or 2.25%, to 33,202.22; the S&P 500 lost 99.57 points, or 2.49%, to 3,895.75; and the Nasdaq Composite dropped 360.36 points, or 3.23%, to 10,810.53.
The declines marked the biggest one-day percentage drops for the S&P and the Nasdaq since Nov 2, and largest for the Dow since Sept 13. Each closed at its lowest level since Nov 9.
All the 11 major S&P 500 sectors were in the red, with communication services and technology stocks falling nearly 4% as the worst performing on the session.
To investors now, “the risk of a hard landing is greater than they thought it was” said LBBW’s Karl Haeling.
“I think the market discounted a soft landing like a mild recession, but it has not discounted a harder recession,“ he said.
US retail sales fell 0.6% in November from October, a bigger drop than expected, as persistently high inflation pressures shoppers during the key festive season.
Federal Reserve (Fed) data released on Thursday also showed a 0.2% decline in industrial production last month, defying analysts’ expectations for an uptick.
And the New York Federal Reserve Bank’s Empire survey saw a plunge in readings, with shipments and new orders worsening, analysts noted.
The Fed projected continued rate increases to above 5% in 2023, a level not seen since a steep economic downturn in 2007.
“It is not just what they did but what they said, and it certainly does seem like they are still worried about inflation and this is not going to be the end of the rate increases,” said Melissa Brown, global head of applied research at Qontigo in New York.
“It really is hard to see what is going to turn things back around until we start seeing more data - which could be earnings, which could be the next inflation print or the Fed statement next year. The good news is it’s almost next year.”
A day after the latest Fed interest rate increase, the European Central Bank and the Bank of England were among central banks on Thursday also lifting interest rates, both opting for 50 basis points increases.
While equity market losses were broad-based, large tech companies suffered through an especially brutal session, with Apple losing 4.7%, Facebook parent Meta 4.5% and Netflix 8.6%.
Netflix Inc slumped 8.63% after a media report that the company would let its advertisers take their money back after missing viewership targets.
Nvidia Corp dropped 4.09% after HSBC Global Research began coverage of the chipmaker’s stock with a “reduce” rating. – AFP, Reuters