Stock Selloff Puts S&P 500 in Bear-Market Territory - Upsmag - Magazine News


Stock Selloff Puts S&P 500 in Bear-Market Territory

US stocks slipped Friday, with the S&P 500 on track to close in bear market territory, extending recent losses that have major indexes on track for their longest streak of weekly declines in more than two decades.

The S&P 500 was recently down 1.6% after narrowly avoiding entering a bear market, or a 20% decline from its last peak, during a choppy trading session. The Dow Jones Industrial Average declined 1.3%, while the Nasdaq Composite lost 2.3%.

The S&P 500 and Nasdaq are on course for their seventh straight weekly loss, their longest such losing streak since 2001, according to Dow Jones Market Data. The Dow is on course for an eighth straight weekly decline, its longest such streak since 1932. All three indexes were recently on track to finish the week down at least 4%.

Markets have been whipsawed by fears about the health of the US and global economy. Technology stocks began the week higher, only to tumble in subsequent days as investor worries about how far the Federal Reserve will go to rein in inflation drove selling of the stock market’s priciest shares.

The pain spread beyond the technology sector. Major retailers reported their profits being hurt by rising costs and supply-chain disruptions, driving a selloff that led to Target and

Walmart‘s

worst one-day decline since the Black Monday crash of 1987.

Stocks got a brief reprieve Friday, opening higher after China’s central bank lowered an interest rate that acts as a benchmark for mortgages. But markets then erased the entirety of their morning gains within a few hours. Investors and analysts say they expect tightening financial conditions in the US will continue to pressure markets in the coming weeks.

“We still need to build more evidence to convince markets that a soft landing is possible,” said Arun Sai, a multiasset strategist at Pictet Asset Management, referring to the Fed’s goal of slowing the economy enough to contain inflation but not so much that it causes a recession.

Government bond prices rose, benefiting from investors flocking toward assets that tend to perform well in times of economic stress. The yield on the benchmark 10-year Treasury edged down on Friday to 2.817% from 2.854% on Thursday, heading for a third straight day of declines. Prices rise when yields fall.

Earnings drove swings among individual stocks Friday.

Shares of

Ross Stores

fell 22% after it posted a decline in sales and said it expects another drop this quarter. The retailer, like many other businesses, said its results were hurt by rising costs for transportation and labor.

agricultural equipment maker

Deere

dropped 12% even though it posted higher sales and profit on strong demand. Its chief executive said supply-chain issues disrupted production levels and deliveries.

Meanwhile,

Foot Locker

rose 3.2% after its chief financial officer said he expects the retailer’s full-year earnings to be at the upper end of guidance.

Palo Alto Networks

added 8.4% after the cybersecurity company reported quarterly revenue that beat analysts’ expectations.

For the most part, earnings among S&P 500 companies have been coming in better than analysts have expected, said Kiran Ganesh, a multiasset strategist at UBS.

“The question is from the next quarter onward, where we will have the full impact of the jump in oil prices and the war in Ukraine,” Mr. Ganesh said.

Overseas, the Stoxx Europe 600 added 1.5%. Asian stocks also rose, with the Shanghai Composite climbing 1.6% and Hong Kong’s Hang Seng jumping 3%.

A trader worked on the floor at the New York Stock Exchange on Thursday.


photo:

Seth Wenig/Associated Press

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Akane Otani at akane.otani@wsj.com

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