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Stock Market News for Sep 30, 2022

Wall Street closed sharply lower on Thursday and gave up all recovered ground of the last trading session. Market participants are gradually adjusting the cost of an imminent recession in stock valuations. Investors’ sentiment has dented significantly as a global technology tycoon is assessing demand shortage going forward. All the three major stock indexes ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) slid 1.5% or 458.13 points to close at 29,225.61. The blue-chip index has recorded a new closing low in 2022. Notably, 27 components of the 30-stock index ended in negative territory while 2 in green and 1 remained unchanged.

The tech-heavy Nasdaq Composite finished at 10,737.50, tumbling 2.3% or 314.13 points  due to disappointing performance of large-cap technology stocks.

The S&P 500 dropped 2.1% to end at 3,640.47, marking its lowest closing since Nov 30, 2020. Ten out of 11 broad sectors of the benchmark index closed in negative zone. The Communication Services Select Sector SPDR (XLC), the Real Estate Select Sector SPDR (XLRE), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) plunged 2.4%, 2.8%, 3.5% and 2.6%, respectively.

The fear-gauge CBOE Volatility Index (VIX) was up 5.5% to 31.84. A total of 11.6 billion shares were traded on Thursday, higher than the last 20-session average of 11.6 billion. The S&P 500 recorded no new 52-week highs and 106 new 52-week lows. The Nasdaq Composite posted 14 new 52-week and 518 new lows.

Technology Stocks Lead Market Mayhem

Yesterday’s market turmoil was mainly owing to a rare negative news for global technology behemoth Apple Inc. AAPL. On Sep 28, Bloomberg reported that Apple plans not to increase the production of its newly launched iPhone as the demand failed to match the company’s expectation.

Per Bloomberg, Apple told its suppliers not to increase assembly of its flagship iPhone 14 product family. Earlier the company decided to increase the production of iPhone 14 by 6 million units in the second half of 2022.

Apple is trying reduce its dependence on China for the iPhone production line. Earlier this month, the company said that it has shifted some of its production facility from China to India. Consequently, the shares of Apple dropped 4.9%. Apple currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earlier several U.S. corporate behemoths have opted for workforce retrenchment and other cost cutting measures. Various retail bigwigs have already warned for slowing demand. Social media companies are suffering from a stiff reduction of digital advertisement.

Despite a global financial crisis due to soaring U.S. dollar price, various important Fed officials have said that they are in favor of rigorous interest rate hike so long price stability restored. Market participants are worried that the Fed may continue with ultra-hawkish monetary policies even if the U.S. economy enters a recession.

Economic Data

The Department of Labor reported that the weekly jobless claims fell to a 5-month low at 193,000 for the week ended Sep 24. The consensus estimate was 216,000. The Data for the previous week was revised downward to 209,000 from 213,000 reported earlier. Continuing claims that reported a week behind fell 29,000 to 1.347 million.

The third estimate of the second-quarter 2022 U.S. GDP contracted 0.6%, same with that of the second estimate. The personal consumption expenditure (PCE) inflation came in at 7.3% in the second quarter 2022 compared with 7.5% in the first quarter. The core PCE inflation (excluding the volatile food and energy items) increased 4.7% in the second quarter compared with 5.6% in the first quarter.

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