SEPT 23 — Wall Street's main indexes fell today as investors fretted over the prospect of an economic downturn and a hit to corporate earnings from the US Federal Reserve's aggressive policy tightening moves to quell inflation.
The Dow breached its mid-June lows on an intraday basis to touch 29,643.93 points and hit a near-two year low.
The S&P 500 and the Nasdaq are also closing in on mid-June lows, their weakest points for the year.
Both the S&P 500 and the Nasdaq are already in bear market and down more than 22 per cent and 30 per cent, respectively, so far this year, amid worries about a host of issues including the Ukraine conflict and tightening financial conditions across the globe.
The US central bank raised rates by a widely expected 75 basis points on Wednesday and signaled a longer trajectory for policy rates, dashing hopes that the Fed expects to get inflation under control in the near term.
"The most recent Fed actions leave us with the feeling that the end of the rate rises is not near," said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.
"There is very little positive news right now and it could lead to a sort of a final selloff ... it's certainly possible that we could be approaching the near-term lows."
Dire outlooks from a handful of companies - most recently FedEx Corp and Ford Motor Co - have also added to woes in a seasonally weak period for markets.
Goldman Sachs cut its year-end 2022 target for the benchmark S&P 500 index by about 16 per cent to 3,600 points, a 2.5 per cent decline from current levels.
At 10:08 a.m. ET, the Dow Jones Industrial Average was down 408.50 points, or 1.36 per cent, at 29,668.18, the S&P 500 was down 65.07 points, or 1.73 per cent, at 3,692.92, and the Nasdaq Composite was down 220.27 points, or 1.99 per cent, at 10,846.54.
All the three indexes were set for sharp weekly losses.
Technology and growth stocks slid with megacap names including Alphabet Inc, Apple Inc, Amazon.com , Microsoft Corp and Tesla Inc all down more than 1 per cent.
All the 11 major S&P sectors declined in early trading, led by a 5.6 per cent drop in energy shares. Banks fell 1.6 per cent.
Costco Wholesale Corp shed 2.4 per cent after the big-box retailer reported a fall in its fourth-quarter profit margins.
The CBOE volatility index, also known as Wall Street's fear gauge, rose to 28.72 points.
Meanwhile, Fed Chair Jerome Powell is set to give opening remarks on the transition to a post-pandemic economy at an event at 2 p.m. ET.
Declining issues outnumbered advancers for a 11.33-to-1 ratio on the NYSE and a 6.67-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week high and 125 new lows, while the Nasdaq recorded seven new highs and 558 new lows. — Reuters