Dow Tumbles To Lowest Closing Level In Well Over A Year

Stocks moved sharply lower during trading on Friday, extending the notable downward move seen over the past several sessions. With the steep drop on the day, the Dow dropped to its lowest closing level in over a year, while the Nasdaq and the S&P 500 hit three-month closing lows.

The major averages rebounded from their lows of the session going into the close but continued to post steep losses. The Dow tumbled 486.27 points or 1.6 percent to 29,590.41, the Nasdaq dove 198.88 points or 1.8 percent to 10,867.93 and the S&P 500 plunged 64.76 points or percent to 1.7 percent to 3,693.23.

Closing lower for the fourth consecutive session, the major averages also posted steep losses for the week. The Dow slumped by 4.0 percent, while the S&P 500 and the Nasdaq plummeted by 4.7 percent and 5.1 percent, respectively.

Concerns about the outlook for the global economy continued to weigh on Wall Street following aggressive interest rate hikes by central banks around the world.

Traders remain concerned the central banks’ efforts to combat elevated inflation will push the global economy into a recession.

The Federal Reserve raised interest rates by another 75 basis points earlier this week and signaled more significant rate hikes later this year.

While the Fed’s projections pointed to an eventually tapering of rate hikes by next year, traders worry about the outlook for the global economy in the months ahead.

Fed Chair Jerome Powell spoke at a Fed Listens event this afternoon but did not specifically comment on monetary policy, instead commenting on the economy in general terms.

“We continue to deal with an exceptionally unusual economic set of disruptions. As policymakers, we are committed to using our tools to help steer the economy through what has been a uniquely challenging period,” Powell said.

He added, “The insights you share in these events help us home in on the challenges and opportunities that are shaping what we might think of as the new normal of the American economy.”

Sector News

Energy stocks turned in some of the market’s worst performances on the day amid a steep drop by the price of crude oil. Crude for November delivery plunged $4.75 to $78.74 a barrel amid concerns about the outlook for demand.

Reflecting the sell-off in the energy sector, the Philadelphia Oil Service Index plummeted by 8.3 percent, the NYSE Arca Oil Index tumbled by 7.3 percent and the NYSE Arca Natural Gas Index dove by 6.4 percent.

Gold stocks also moved sharply lower along with the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 5.1 percent.

Concerns about a global recession also contributed to substantial weakness among steel stocks, as reflected by the 4.4 percent nosedive by the NYSE Arca Steel Index.

Airline, networking, and financial stocks also saw considerable weakness, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday, with the Japanese markets closed for a holiday. China’s Shanghai Composite Index slid by 0.7 percent, while Australia’s S&P/ASX 200 Index plunged by 1.9 percent.

The major European markets also showed significant moves to the downside on the day. While the French CAC 40 Index plummeted by 2.3 percent, the U.K.’s FTSE 100 Index and the German DAX Index both dove by 2.0 percent.

In the bond market, treasuries turned positive over the course of the session after seeing initial weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.1 basis points to 3.697 percent after reaching a twelve-year intraday high of 3.773 percent.

Looking Ahead

Next week’s trading may be impacted by reaction to reports on durable goods orders, consumer confidence, new home sales and personal income and spending.

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