S&P 500 closes at fresh 2022 low, Dow falls 458 points as sell-off on recession fears resumes

S&P 500 closes at fresh 2022 low, Dow falls 458 points as sell-off on recession fears resumes

US stocks fell on Thursday after a modest rise in the previous session, as growing recession fears and turmoil in the UK market renewed the sell-off.

Stocks rebounded from their steepest losses of the day, with the Dow Jones Industrial Average down more than 600 points and the Nasdaq down nearly 4% at one o’clock in the afternoon. However, the major indexes still finished deep in the red as the S&P 500 hit a new closing low for the year.

British Prime Minister Liz Truss said she was standing by the government’s tax cut plan, which rattled markets earlier in the week and sent the pound tumbling to 37-year lows last week. Top economists including Paul Krugman, Mohamed El-Erian and Nouriel Roubini weighed in on the new fiscal policy, warning it could push UK inflation higher and require more aggressive central bank action, raising the risk of a recession.

Apple led U.S. stocks lower as Bank of America downgraded the iPhone maker’s stock amid weakening consumer sentiment. It’s the second steep loss in a week for the company, following a sell-off on Wednesday following news that weaker demand scuppered plans to expand iPhone 14 production.

Treasury yields jumped again as investors weighed in on the continued hawkishness of the Federal Reserve despite the growing likelihood of a recession. The yield on the 10-year Treasury note rose six basis points to 3.76%. The yield on the key government bond exceeded 4% on Wednesday for the first time since 2008.

Here are the US indices at the 4pm closing bell on Thursday:

  • S&P 500: 3,640.56, down 2.11%
  • Dow Jones Industrial Average: 29,225.61, down 1.54% (458.13 points)
  • Nasdaq Composite: 10,737.51, down 2.84%
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Here’s what’s happening today:

  • Former Chancellor of the Exchequer Larry Summers has warned that the latest market downturn has parallels with the early moments of the Great Recession and that volatility in the UK could spill over to the rest of the world.
  • China has told state-owned banks to brace for a massive plunge in the dollar and a buying spree of the yuan, as previous interventions by Beijing this year failed to stem the yuan’s slide.
  • Retail investors are showing signs of throwing in the towel if shares of Apple and Tesla start to fall, Vanda Research said in a note.

For commodities, bonds and cryptocurrencies:

  • West Texas Intermediate crude fell about 0.7% to $81.59 a barrel. Brent crude, the international benchmark, fell 0.75% to $88.67 a barrel.
  • Gold prices were mostly flat, trading at $1,669 an ounce.
  • The 10-year Treasury yield rose about six basis points to 3.76%.
  • Bitcoin is down 0.6% at $19,409.

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