Wall St slips in choppy trading on rising recession worries

  • Apple fell after Morgan Stanley cut its December shipment target
  • Tesla worries about production losses
  • Indexes fell: Dow 0.07%, S&P 0.25%, Nasdaq 0.5%

Dec 7 (Reuters) – Wall Street’s main indexes struggled to move ahead in shock trade on Wednesday as investors weighed potential recessionary concerns over the tightening pace of the Federal Reserve’s monetary policy and its impact on corporate America.

The benchmark S&P 500 (.SPX) fell for a fifth straight session on Wednesday.

The Nasdaq ( .IXIC ) fell for a fourth straight session, led by a 1.3% drop in Apple Inc ( AAPL.O ) on Morgan Stanley’s iPhone shipment target cut and a 3.5% drop in Tesla Inc ( .IXIC ) from production. worry about loss.

Markets have also been rattled by negative comments on Tuesday from top executives at Goldman Sachs Group Inc ( GS.N ), JPMorgan Chase & Co ( JPM.N ) and Bank of America Corp that a mild or deeper recession is expected.

Concerns that the U.S. central bank could stick with a longer rate-hiking cycle have intensified recently amid strong jobs and services sector reports.

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More economic data, including weekly jobless claims, the producer price index and this week’s University of Michigan consumer sentiment survey, will be on the watch list for what to expect from the Fed on Dec. 14.

“When they (investors) look at what the earnings estimates are for the rest of 2022 and 2023, they haven’t considered a recession in 2023,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

“There have been some adjustments to earnings estimates for the next 12 months and I think that’s putting some pressure on the markets.”

The CBOE Volatility Index (.VIX), also known as Wall Street’s fear gauge, rose to a two-week high before slipping back slightly.

Money market participants see a 91% chance the Fed will raise its key benchmark rate by 50 basis points to 4.25%-4.50% in December, with rates peaking in May 2023 at 4.93%.

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Until At 14:21 ET (1921 GMT), the Dow Jones Industrial Average (.DJI) fell 23.81 points, or 0.07%, to 33,572.53, while the S&P 500 (.SPX) lost 9.85 points, or 0. 25% to 341 and 931. The Nasdaq Composite (.IXIC) was down 54.80 points, or 0.5%, at 10,960.09.

Concerns about soaring borrowing costs have boosted the dollar, but demand for risky assets such as stocks has weakened this year. The S&P 500 is on track to snap a three-year winning streak, down 17.5% so far in 2022.

Four of the 11 major S&P sector indexes were higher, with healthcare stocks (.SPXHC) leading the way, while technology (.SPLRCT) and communications services (.SPLRCL) were among the worst performers.

Energy (.SPNY) fell 0.6% for its fifth straight decline. The sector’s performance was weighed down by further declines in US crude prices, at one point trading at their lowest intraday level since late December 2021.

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Carvana Co (CVNA.N) fell 40.1% after Wedbush downgraded the used car retailer’s stock to “underperform” from “neutral” and cut its price target to $1.

Meanwhile, United Airlines ( UAL.O ) was trading 2.5% lower. Unions representing the airline’s various workers said they would join forces in contract negotiations.

Travel-related stocks fell overall. Delta Air Lines ( DAL.N ) and American Airlines Group ( AAL.O ) were down 3 percent and 4.1 percent respectively, while cruise line operators Carnival Corp ( CCL.N ) and Norwegian Cruise Line Holdings ( NCLH.N and accommodation services affiliate Airbnb Inc ( ABNB.O ) and Booking Holdings ( BKNG.O ) all fell between 1.5% and 3.7%.

Reporting by Shubham Batra, Ankika Biswa, Johann M Cherian and Shashwat Chauhan in Bengaluru and David French in New York; Edited by Vinay Dwivedi, Shounak Dasgupta and Lisa Shumaker

Our Standards: The Thomson Reuters Trust Principles.

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