Monday, December 4

Stocks extend sell-off as Fed, geopolitical fears loom

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NEW YORK — Wall Street plunged in a broad-based sell-off on Monday, and the S&P 500 came within a hair’s breadth of a correction as investors faced an increasingly hawkish Federal Reserve, growing geopolitical tension and persistent headwinds from the pandemic. The major US stock indexes pared their losses in mid-afternoon trading with the S&P 500 hovering around a 10% drop from its record closing high on Jan 3, a move that would confirm the index is in correction.

This came on the heels last week of the S&P 500 and the Nasdaq suffering their largest weekly percentage plunge since March 2020, when shutdowns to contain the pandemic sent the economy spiraling into its steepest and most abrupt recession on record.


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“From the financial market’s standpoint, 2022 is a disaster so far,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “It’s a continuation of the same issues – uncertainty about the Fed, and the issue with Ukraine. “

“There’s a lot of uncertainty out there that’s causing fear across the equity markets,” Ghriskey added.

The US Federal Reserve is due to convene its two-day monetary policy meeting on Tuesday, and market participants will be parsing its concluding statement and Chairman Jerome Powell’s subsequent Q&A session for clues as to the central bank’s timeline for hiking key interest rates to combat inflation .

In a sign that geopolitical tensions are heating up, NATO announced it was putting forces on standby to prepare for a potential Russian invasion of Ukraine.


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The threat of potential conflict in that region helped US Treasury yields dip, pausing their recent upward climb, which has pressured stocks in recent months.

Meanwhile a report from IHS Markit gave evidence that surging infections of the Omicron COVID variant have caused a marked deceleration of business activity in the United States.

The Dow Jones Industrial Average fell 476.62 points, or 1.39%, to 33,788.75, the S&P 500 lost 64.38 points, or 1.46%, to 4,333.56 and the Nasdaq Composite dropped 172.18 points, or 1.25%, to 13,596.74.

All 11 major sectors of the S&P 500 were lower, with utilities suffering the largest percentage loss.

Fourth-quarter reporting season is in full swing, with 65 of the companies in the S&P 500 having posted results. Of those, 77% have come in above expectations, according to data from Refinitiv.


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On aggregate, analysts now see S&P 500 annual EPS growth of 23.7%, per Refinitiv.

A series of disappointing earnings from big banks and, notably, lockdown darling Netflix Inc have overshadowed many better-than-expected results.

Washington officials announced they were suing Alphabet Inc , claiming deceptive location practices by its Google search engine. The company’s shares were down 2.0%.

Tesla Inc slid 5.1% to lead declines among the mega-cap technology stocks.

Kohl’s Corp surged 32.9% after Reuters reported private equity firm Sycamore Partners is preparing to make a bid for the department store chain days after a consortium backed by activist investment firm Starboard Value proposed a buyout.

Declining issues outnumbered advancing ones on the NYSE by a 2.99-to-1 ratio; on Nasdaq, a 1.80-to-1 ratio favored decliners.

The S&P 500 posted one new 52-week high and 31 new lows; the Nasdaq Composite recorded four new highs and 1,310 new lows. (Reporting by Stephen Culp; additional reporting by Devik Jain and Bansari Mayur Kamdar in Bengaluru; Editing by Cynthia Osterman)



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