First published: 4:30 AM EST
Stock indices finished Friday’s trading session in the red as investors continued to get increasingly wary of an impending downturn. The Dow Jones Industrial Average (DJIA), the S&P 500 (SPX), and the Nasdaq 100 (NDX) fell 1.62%, 1.72%, and 1.66%, respectively. To make matters worse, the Dow Jones closed at a new 2022 low of $29,590.
The energy sector (XLE) was the session’s laggard, as it fell by 6.72%. Conversely, the healthcare sector (XLV) was the session’s leader, with a loss of 0.45%.
Furthermore, the U.S. 10-Year Treasury yield fell slightly to 3.67%. On the other hand, the Two-Year Treasury yield increased, as it hovers around 4.2%. This brings the spread between them to -53 basis points. The negative spread indicates that investors still have fears of a recession.
The Federal Reserve’s third consecutive 75 basis-point interest rate hike was largely expected. However, the policymakers’ comments on a recession and the central bank’s commitment to its aggressive policy path brought a sense of finality to investors about a recession knocking on the door (if not already one step in).
Meanwhile, Goldman Sachs downgraded the year-end target for the S&P 500 to 3,600 from 4,300, citing recessionary concerns.
Oil continued its downslide after inching up yesterday, with WTI crude down more than 5% to $79.07 at the time of writing.
In addition, retailer Costco (NASDAQ: COST) expressed concerns about higher freight and labor costs in the coming months. These concerns led to COST shares declining by 4.26%, despite reporting a top and bottom line beat.
What Happened in the Markets Thursday?
On Thursday, the S&P 500, the Dow, and the Nasdaq 100 fell to close the day 0.84%, 0.35%, and 1.17% lower than they began.
For the week thus far, the S&P 500 is down about 3%, the Nasdaq 100 is lower by about 3.3%, and the Dow has lost around 2.4%. All three averages are on track to end the week in the red.
The industries most affected this week were industrials, consumer discretionary, and growth technology stocks including semiconductor stocks.
In the bond market, the 2-year and 10-year Treasury bills recorded the highest yields in the last 10 years.
Experts tracking investor behavior believe that more and more investors are starting to accept that a recession is inevitable. Nonetheless, the market is expected to remain volatile till the Fed starts slowing down, which is not likely to happen until we are well into 2023.
Meanwhile, the labor market continues to show remarkable resilience as last week’s unemployment benefit claims increased modestly by 5,000 to reach 213,000. Meanwhile, the number for continuing benefits dropped by 22,000 to 1.38 million.
