Wall St posts third straight quarterly loss as inflation weighs and recession looms

NEW YORK, Sept 30 (Reuters) – The S&P 500 closed its biggest September decline in two decades on Friday, skidding across the finish line in a tumultuous quarter characterized by historically high inflation, rising interest rates rise and fears of recession.

All three major indices veered to a sharply lower end, after reversing a brief rally early in the session.

The S&P and Dow Jones recorded their third consecutive weekly declines, and all three indices posted their second consecutive monthly losses.

In the first nine months of 2022, Wall Street suffered three straight quarterly declines, the longest losing streak for the S&P and Nasdaq since 2008 and the longest quarterly fall for the Dow in seven years.

“It’s another lousy day to end a lousy quarter in what’s shaping up to be a very lousy year,” said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. “Investors will look back and realize this was the year the Fed pulled back a total of 180 views on inflation and quickly became incredibly hawkish.”

The Federal Reserve rattled markets as it embarked on its most relentless round of interest rate hikes in decades to rein in stubbornly high inflation, leading many market participants to watch key economic data to looking for signs of an impending recession.

“The realization that the Fed has been doing everything it can to fight high inflation for 40 years has investors worried they’re pushing the economy over the edge and into recession,” Detrick added.

The Commerce Department’s Personal Consumption Expenditure (PCE) report did little to allay those fears, showing that if consumers continue to spend, the prices they pay have accelerated, still outpacing the Fed inflation target and virtually ensuring the central bank’s hawkish monetary policy. will continue longer than investors had hoped.

Recession fears also echoed stark warnings from Nike Inc (NKE.N) and cruise line Carnival Corp (CCL.N), both citing inflation-related pressures on margins. read more read more

Shares of the companies fell 12.8% and 23.3%, respectively.

The Dow Jones Industrial Average (.DJI) fell 500.1 points, or 1.71%, to 28,725.51; the S&P 500 (.SPX) lost 54.85 points, or 1.51%, to 3,585.62; and the Nasdaq Composite (.IXIC) fell 161.89 points, or 1.51%, to 10,575.62.

Of the 11 major S&P 500 sectors, real estate (.SPLRCR) was the lone gainer, while utilities (.SPLRCU) and technology (.SPLRCT) suffered the largest percentage losses.

Apple Inc (AAPL.O), Microsoft Corp, Amazon.com and Nike weighed the heaviest.

Corporate earnings reports for the quarter ending with Friday’s closing bell will start landing in a few weeks, and analyst expectations are on the downside.

Analysts now expect S&P 500 annual earnings growth of 4.5%, in total, down from the 11.1% estimate at the start of the quarter.

Quarter-end fund reallocations and so-called “fronting” likely contributed to the session’s volatility.

Falling issues outnumbered rising ones on the NYSE by a ratio of 1.45 to 1; on the Nasdaq, a ratio of 1.38 to 1 favored the decliners.

The S&P 500 posted no new 52-week highs and 93 new lows; the Nasdaq Composite recorded 27 new highs and 380 new lows.

Volume on U.S. exchanges was 12.44 billion shares, compared to an average of 11.45 billion over the past 20 trading days.

Reporting by Stephen Culp; Additional reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru; Editing by Jonathan Oatis

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