U.S. stocks recorded another week of sharp losses Friday in a downbeat end to a month and quarter wrought by vicious selling that tipped all three major averages into a bear market.
The S&P 500 tumbled 1.5% after trying — and failing — to find its footing earlier in the session, while the Dow Jones Industrial Average erased nearly 500 points, or 1.7%. The technology-focused Nasdaq Composite declined 1.5%.
The Nasdaq and S&P 500 are now in three-quarter losing streaks for the first time since 2009. The Dow also posted a third-straight losing quarter, its first such time since 2015. All of the major indexes are down at least 21% on the year.
The S&P 500’s drop on Friday marked its 50th decline of 1% or more this year, the most downside volatility since 2009, according to Compound Advisors’ Charlie Bilello. For the month, the S&P 500 and Dow were down more than 9%, and the Nasdaq about 10%. September's 9.3% decline for the S&P was its largest one-month percentage decline since March 2020.
On the corporate front, earnings results showed that shifting consumer habits are taking their toll on some of America's largest companies. Shares of Carnival (CCL) plunged 23% to their lowest since 1993 after the cruise line reported annual bookings and quarterly guidance that disappointed Wall Street.
Nike (NKE) was also a key mover on Friday after the company reported a 44% surge in inventory and outlined other macroeconomic headwinds that weighed on the quarter. Shares plunged 12.8% despite earnings that came in line with expectations and the company reaffirming its full-year fiscal sales outlook.
And chipmaker Micron Technology (MU) shares nudged slightly higher even as the company warned about tough times ahead for PC and smartphone demand and said it was slashing investments. Micron, however, forecast strong revenue growth in the second half of fiscal 2023, projecting a recovery in demand by that point.
The economic data front also produced fresh warning signals for investors. The Federal Reserve's preferred inflation gauge showed prices climbed more than expected in August. The personal consumption expenditures (PCE) price index rose 0.3% last month after retreating in July. On an annual basis, the PCE price index increased 6.2%. The so-called core PCE price index — which excludes the volatile food and energy components of the measure — rose 4.9% year-over-year in August, up from a 4.7% increase in July.
Meanwhile, the Commerce Department reported Friday that consumer spending increased 0.4% last month after slipping 0.2% in July.
After an abrupt policy shift by the Bank of England earlier this week to restart bond purchases, investors in the U.S. had fleeting hopes the Federal Reserve may follow suit and ease the pace of its aggressive monetary stance. On Thursday, the odds of a softer 50-basis-point hike at the central bank’s November meeting rose above 50% but retreated back to around 40% as traders assessed hawkish Fedspeak and the lowest reading on jobless claims in five months.
In an interview with CNBC on Thursday, Federal Reserve Bank of Cleveland President Loretta Mester asserted she and her peers will maintain restrictive policy until inflation subsides and distinguished the U.K.’s market turmoil from conditions in the U.S.
“Market functioning is incredibly important because you won’t be able to hit any monetary policy goals if the markets aren’t functioning,” Mester said. “That’s different than worrying about volatility in the markets,” adding that so far there has been no dysfunction in U.S. markets.
And on Friday, Fed Vice Chair Lael Brainard hinted that the central bank will keep rates high in the face of continued high inflation.
"Monetary policy will need to be restrictive for some time to have confidence that inflation is moving back to target," she said in prepared remarks for a speech at a New York conference. "For these reasons, we are committed to avoiding pulling back prematurely."
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc