Rate worries sink the S&P 500 to a two-year low, enters bear territory

Rate worries sink the S&P 500 to a two-year low, enters bear territory

By Noel Randewich and Shreyashi Sanyal

Sept 27 (Reuters) – Wall Street plunged further into a bear market on Tuesday, after the S&P 500 index hit its lowest closing level in two years, as U.S. Federal Reserve officials showed appetite for more interest rate hikes, even at the risk of tipping the economy into recession.

* The benchmark S&P 500 index is down about 24% from its record close on Jan. 3. Last week, the Fed signaled that high interest rates could extend into 2023 and the index erased the latest gains that were part of a summer rally.

* With the latest signal from the Fed, the benchmark S&P 500 Index erased the latest gains from a summer rally and posted its lowest close since November 2020.

* In remarks issued Tuesday, St. Louis Fed President James Bullard defended more rate hikes, while Chicago Fed Chief Charles Evans said the central bank will need to raise the rate. of credit by at least another percentage point this year.

* “It’s disappointing, but it’s not a surprise,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “People are worried about the Federal Reserve, the direction of interest rates, the health of the economy.”

* Wells Fargo analysts now expect the US central bank to raise its target range for the federal funds rate to between 4.75% and 5.00% by the first quarter of 2023.

* Most of the 11 S&P 500 sector indices fell, with utilities and consumer staples leading the trend.

* The energy sector index rebounded after Sweden launched an investigation into possible sabotage following major leaks from two Russian pipelines that released gas into the Baltic Sea.

* Concerns that corporate profits will be hit by higher prices and a weaker economy have also weighed on Wall Street in the past two weeks.

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* Analysts lowered their expectations for S&P 500 earnings for the third and fourth quarters, as well as for the full year. For the third quarter, analysts now expect S&P 500 earnings per share to rise 4.6% year over year, compared with 11.1% growth estimated in early July.

(Edited in Spanish by Juana Casas and Marion Giraldo)

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