Dow notches new low for 2022, consumer staples week’s best-performing S&P 500 sector
Stocks stumbled on Friday and continued the week’s sell-off trends following the Fed’s rate-hike decision, with the Dow Jones Industrial Average closing at a fresh low for 2022.
The Dow shed 486.27 points, or 1.62%, to 29,590.41. The S&P 500 dropped 1.72% to 3,693.23, while the Nasdaq Composite edged 1.8% lower to 10,867.93.
All the major averages capped their fifth negative week in the last six, with the Dow giving up 4%. The S&P and Nasdaq lost 4.65% and 5.07%, respectively.
All major S&P 500 sectors also closed out the week with losses, led to the downside by energy and consumer discretionary. Consumer staples was the week’s best-performing sector, falling just 2.15%
— Samantha Subin
Gold slides to lowest in almost 2.5 years, gold mining ETFs tumble
December gold contracts closed 1.5% lower on Friday at $1655.60 the ounce after touching $1646.60 earlier in the session, the lowest since the first week of April 2020, three weeks into the Covid lockdown.
SPDR Gold Trust dropped 1.7% Friday, iShares Gold Trust fell 1.8%, the VanEck Gold Miners ETF slumped 5.5% and the VanEck Junior Gold Miners ETF slid 6.5%.
— Scott Schnipper, Gina Francolla
More than 91% of S&P 500 stocks on pace for losses
At least 91% of stocks in the S&P 500 were on track to finish Friday’s session with losses, led to the downside by energy names. Shares of APA Corp. and Marathon Oil led the S&P’s losses, slumping 12.3% and 11.3%, respectively.
Consumer discretionary names like Royal Caribbean and Norwegian Cruise Line also shed more than 5%, adding to the losses in the benchmark index.
Just 42 stocks held on to modest gains heading into the close, with shares of Generac and Domino’s Pizza up about 3% each.
— Samantha Subin
Powell notes ‘new normal of the American economy’
Federal Reserve Chairman Jerome Powell used the now-familiar term “new normal” to characterize the current state of the high-inflation low-growth U.S. economy.
Addressing a Fed Listens event Friday afternoon, the central bank leader did not offer any policy observations but spoke briefly on the economy during introductory remarks.
“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. “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.”
The comments come two days after the Fed enacted its third consecutive 0.75 percentage point interest rate increase to battle soaring inflation. Fed Listens events are public hearings during which policymakers hear from various members of the public, with Friday’s event focusing on business leaders.
“New normal” has been put to use multiple times over the past years, most prominently to describe the financial crisis in 2008, then the Covid-era economy.
Stocks hit session lows, Dow at lowest level for 2022 as final trading hour kicks off
Stocks hit session lows as the final hour of trading kicked off in what was a brutal week for stocks.
The Dow Jones Industrial Average fell 833 points, or 2.7%, to hit a fresh low for the year and enter what many analysts regard as bear market territory. The S&P 500 fell 2.9% and was on pace for a new yearly closing low, while the Nasdaq Composite slid about 3%.
— Samantha Subin
Credit Suisse stays underweight in U.S. equities amid growth concerns
Fears of a recession and what that means for growth stocks have mounted in recent days following the Fed’s indication that it plans to remain aggressive in its inflation fight.
Amid this backdrop, Credit Suisse is maintaining its underweight stance on U.S. equities, according to strategist Andrew Garthwaite.
“The US comes in at the bottom of our regional scorecard,” Garthwaite wrote in a note to clients Friday. “We are underweight growth and the US market is most overweight growth.”
Garthwaite specifically highlighted tech as one of the market areas giving him pause. Technology stocks were among the market’s worst performers on Friday, with shares of some giants including Meta Platforms notching fresh 52-week or multiyear lows in some cases dating back to the start of the pandemic.
According to Credit Suisse’s analysis, the U.S. underperforms at least 70% of the time that technology underperforms. The bank also expects technology to suffer the largest downgrades in the third-quarter earnings season, with Garthwaite noting that software valuations are particularly expensive.
Garthwaite also believes that the U.S. is more at risk than other countries for a hard landing in order to control surging prices, noting that inflation remains “more embedded” than in Europe and Japan.
“The US is the worst-performing region if the cost of high yield rises (which we think it will, with credit spreads far too low, pricing in only a 34% chance of a recession),” he wrote. “Relative earnings revisions are rolling over sharply to be worse than global (partly due to dollar strength).”
— Samantha Subin
Tensions rise in final hour as S&P 500 retests lows
The S&P 500 was near the lows of the day, testing its June lows, ahead of the final hour of trading.
The S&P broke below the closing June low of 3,666, and its intraday low in June was in sight at 3,636. The S&P was trading just above that at 3,655 at 2:35 p.m. ET.
“The low of the year is 3,636. One of two things could happen [today], either we’re going to kiss it and get an oversold bounce into he close or go below it and do some kind of free fall because it doesn’t hold,” said Scott Redler, partner with T3Live.com. He watches the market’s short-term technicals.
If it does break the low, Redler does not see the market making a huge swing lower now. “The way the market is, and how hard it’s come down, it’s going to be hard to get too much traction below it,” he said. If the intraday low is broken, he said his next downside target is 3,385.
“Next week is a historically bad week,” he said.
— Patti Domm
Dan Niles says the market is oversold and expects another bear market rally
Dan Niles, The Satori Fund founder, believes this week’s big sell-off has pushed the market into oversold conditions. The widely followed hedge fund manager said he is staying disciplined and covering short positions.
While Niles still thinks the S&P 500 is about 18% away from its estimated bottom of 3,000, the investor said he expects another bear-market rally around the corner. Niles noted that there have already been five rallies like this this year with an average jump of 9%.
— Yun Li
Big tech, Nike, AT&T among S&P stocks hitting multiyear lows
At least 145 S&P 500 stocks notched fresh 52-week or multiyear lows on Friday. That included shares of big tech stocks Meta Platforms and Alphabet, which traded near levels not seen since March 2020 and February 2021, respectively.
Match Group also notched at fresh all-time low dating back to its November 2015 initial public offering, while AT&T and Verizon traded near their lowers levels since October 2008 and August 2015, respectively.
Here are some of the other stocks hitting fresh lows on Friday:
- Nike trading at lows not seen since July 2020
- Warner Bros. Discovery trading at lows not seen since July 2009
- Booking Holdings trading at lows not seen since November 2020
- Caesars Entertainment trading at lows not seen since August 2020
- Hasbro trading at lows not seen since July 2020
- Walgreens Boots Alliance trading at lows not seen since November 2012
- Baker Hughes trading at levels not seen since October 2018
- 3M trading at lows not seen since September 2013
- Advanced Micro Devices trading at lows not seen since July 2020
- Salesforce.com trading at lows not seen since April 2020
- Intel Corporation trading at lows not seen since August 2015
- MasterCard trading at lows not seen since November 2020
- Microsoft trading at lows not seen since March 2021
- Micron trading at lows not seen since October 2020
- Visa trading at lows not seen since October 2020
- Southwest trading at lows not seen since August 2020
- Lumen Technologies trading at lows not seen since December 1991
— Samantha Subin
CNBC Pro: This week’s top stock performers make cereal and soup
Investors this week turned to companies that make recession-proof stuff like cereal and soup, as fears of a potential economic recession mounted.
The S&P 500 is down more than 5% for the week, and the Dow Jones Industrial Average dipped into bear market territory on Friday, as traders grew worried that an aggressive rate hiking campaign from the Federal Reserve will push the economy into recession.
The top-performing stocks this week include consumer staples names such as General Mills. The food company is up 6.8% this week after raising its full-year sales outlook, citing strong demand for cereal, snacks and pet food.
— Sarah Min
Precious metals drop, gold hits 2-year low
Precious metals were sliding Friday — and in some cases setting new lows for at least the year to date.
Spot gold was down about 1.4%, bringing it to $1,646.50 per ounce, to a low not seen since April 2020.
U.S. gold futures also hit a low not seen since March 2020 after falling 1.5% to $1,655. Futures were still higher than pre-pandemic levels.
But the biggest hits were happening outside of gold as precious metals remained poised to end the week at values lower than where it started. Platinum saw the biggest slide, dropping 4.3% to $861.54. Spot silver decreased 4.1% to $18.85 per ounce. Palladium slid 3.8% to $2,087.67.
— Alex Harring
Dow in bear market territory
The Dow on Friday dipped into a bear market on an intraday basis, trading more than 20% below its January intraday record.
The 30-stock average was also on track to enter bear market territory on a closing basis, last trading about 20.1% below a Jan. 4 record close. Many traders on Wall Street think that, for a bear market to be official, the index has to fall 20% or more on a close-to-close basis.
— Fred Imbert
Dow’s latest stay above 30,000 clocked in at just 94 days
The Dow Jones Industrial Average’s latest stint above the 30,000 water line lasted just 94 days, from June 22 to Sept. 22, 2022.
Compare that to the record amount of time it had spent above 30,000 up until June, which clocked in at 547 days, from mid-December 2020 to mid-June 2022.
Bear in mind, the Dow first closed above 30,000 on Nov. 24, 2020 (lifted by optimism over a Covid vaccine and a hoped-for return to economic growth), and went on to reach an all-time intraday high that very nearly (36,934.84) touched 37,000 back in the first week of January this year.
That equated to a 23% rally.
After first crossing 30,000 in November 2020, at a time of record Quantitative Easing from the Fed and fiscal stimulus from Capitol Hill, the Dow Industrials reached 31,000 in another 29 trading days; 32,000 in 42 trading days; 33,000 in 5 trading days; 34,000 in 20 trading days; 35,000 in 69 trading days; and 36,000 in 71 trading days.
— Scott Schnipper
Keep an eye on the European close, UBS’ Cashin says
UBS director of floor operations Art Cashin said he would keep an eye on the market around 11:30 a.m. ET, roughly when several European markets close.
“Do we start to firm up then? Does that tell us that some of this is some systemic risk coming out of Europe? If we don’t firm up then, then we know it’s equally here in the U.S.,” Cashin said on CNBC’s “Squawk on the Street.”
European markets were broadly lower Friday, with the Stoxx 600 index losing more than 2%.
Cashin also said he was looking to see if the major U.S. averages break key near-term support levels. “If we make lower lows, which we are on the verge of making, it would be a problem,” he said.
— Fred Imbert
September flash US PMI data falls at a softer pace
A contraction in U.S. manufacturing and services activity eased in September, according to S&P Global.
The Flash US PMI Composite Output Index declined at a softer pace this month, falling to 49.3. That’s still up up from 44.6 in August. It’s also the index’s highest reading in three months.
“While output declined in both manufacturing and services during September, in both cases the rate of contraction moderated compared to August, notably in services, with orders books returning to modest growth, allaying some concerns about the depth of the current downturn,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.
— Sarah Min
Costco sheds 2% despite better-than-expected earnings
Shares of Costco slumped about 2% on Friday, despite posting fiscal fourth-quarter revenue and earnings that topped analysts’ expectations.
The wholesale retailer said it’s seeing higher freight and labor costs and reported operating margins slightly below consensus expectations.
— Samantha Subin
Dollar index hits highest level since 2002
The dollar index hit its highest level since 2002.
The index hit a session high of 112.427, or its highest level since May 28, 2002 when the index hit a high of 112.92. It also rose 2.74% for the week, putting it on pace for its best week since March 2020 when the index gained 4.12%
Meanwhile, the British pound and euro slumped against the dollar after the new U.K. government announced tax cuts to boost growth.
— Sarah Min
Growth sectors take a hit, consumer discretionary down 7% this week
Stocks focused on economic growth and a stable economy slumped in early morning trading on Friday. Consumer discretionary slumped more than 2%, with information technology and communication services down at least 1% each. Energy also plummeted 6% as oil prices slipped.
Shares of travel-oriented names took the biggest leg lower, with Norwegian Cruise Line, Carnival, Caesars Entertainment, and Royal Caribbean down 4% each. Ford, Tesla and General Motors also shed about 4% each.
Investors also rotated out of technology names and semiconductors, with Netflix and Amazon down about 2%. Apple and Alphabet shed more than 1%. Nvidia and Advanced Micro Devices slumped 1.5% and 2.1%, respectively.
— Samantha Subin
Stocks open lower, Dow breaches below 30,000 level
Stocks opened lower on Friday, continuing the recent sell-off trend that’s hit Wall Street.
The Dow Jones Industrial Average fell by 340 points, or 1.1%, touching below its June closing low and the 30,000 level. The S&P 500 slid 1.3% and the Nasdaq Composite lost 1.2%.
— Samantha Subin
Oil hits lowest trading price since January
Oil hit a trading low of $79.64 per barrel Friday, marking the first time since early January it has traded below $80 per barrel.
Prices shot up in tandem with Russia’s invasion of Ukraine as the country is a world leader in oil production. March posted a 2022 high at just over $130 per barrel.
Americans paid an average price per gallon of $3.689 on Friday, according to AAA. That’s down about 26% from the highest recorded average that came in June when the national average hit $5.016.
— Alex Harring
Climb in Treasury yields a result of ‘technical issues,’ says Allianz’s El-Erian
The moves in the Treasury market are not a signal on the economy but instead are a result of technical issues, according to Mohamed El-Erian, chief economic advisor to Allianz.
The yield on the 2-year Treasury hit a new 15-year high on Friday, while the 10-year yield neared levels not seen since 2011.
“A lot of people can’t get done what they want to get done, so they’re getting done what they can get done. Don’t underestimate the amount of suboptimal decisions being made right now because liquidity has become so patchy,” he said on CNBC’s “Squawk Box” Friday.
The structural weakness and fragilities have been long in the making and amplified by the duration and size of the Federal Reserve‘s QE, El-Erian added.
“It matters because … if you can’t get what you want to get done, you will start spreading contagion around markets,” he said.
— Michelle Fox
Recession odds increasing as Fed stays aggressive, Citi’s Willer says
A Federal Reserve staying hawkish in its approach to fight surging prices only heightens the risks of recession ahead, Citi’s Dirk Willer said in a note to clients Friday.
“The likelihood of a US recession in 2023 is increasing given the hawkish Fed,” he wrote. “While it is widely understood that earnings estimates are too high given such recession risk, the market is unlikely to be able to look through falling earnings, as valuations also typically compress.”
Willer also believes that the weak year-to-date numbers in equities and indications that the central bank is nowhere near ending its rate-hiking cycle further minimize the likelihood of a Santa Claus rally after the mid-term elections.
“Our charts suggest that the case for a Nov/Dec rally crucially depends on how well the market has been doing going into year-end,” he wrote. “Only when Jan to October returns were strong has a year-end rally been in the cards. This year, Santa may not deliver.”
Citi suggests investors take a defensive stance to play this uncertain market. The bank maintains a long position in healthcare, replacing its previous position in communication with utilities and staying short on financials and industrials.
— Samantha Subin
Where the major averages stand heading into Friday’s session
All the major averages are slated to end the week with losses ahead of Friday’s trading session, with the Dow on track to break below its June closing low.
Here’s where all the major averages stand:
Dow Jones Industrial Average:
- Down 17.2% this year, 2.4% for the week
- 18.6% off its 52-week high
- Sits 0.5% above its June closing low
- Down about 3% for the week, 21.1% this year
- Sits 22% off its highs
- 2.5% above June’s closing low
- Down 3.3% this week, off 29.3% this year
- Sits 31.7% off its highs
- Roughly 4% above June’s low
As of Thursday’s close, all the major S&P 500 sectors sit in negative territory for the year, with the exception of utilities and energy. For the week, the consumer staples sector has suffered the slimmest losses, down just 0.4%.
— Samantha Subin
Coinbase shares fall with crypto prices in premarket trading
Coinbase shares slipped by about 4% in premarket trading as cryptocurrency prices fell.
Although the cryptocurrency exchange has been diversifying its services and revenue streams, that business still accounts for the majority of its revenue, and trading activity tends to stall when prices are low.
The crypto market is especially spooked along with the broader markets after the Federal Reserve this week recommitted to an aggressive rate hiking plan.
— Tanaya Macheel
Bleakley’s Boockvar sees ‘biggest financial bubble’ popping as yields surge
Global government bond yields are soaring, a product of recent sharp central bank interest rate increases to control inflation.
For Peter Boockvar, chief investment officer at Bleakley Financial Group, it’s more evidence of a bubble popping in sovereign debt in which real yields had been running at negative level for years. With yields moving opposite price, the capital losses for holders of those bonds are piling up as central bank are no longer able to keep rates low.
“Bottom line, all those years of central bank interest rate suppression, poof, gone.” Boockvar wrote Friday morning. “These bonds are trading like emerging market bonds and the biggest financial bubble in the history of bubbles, that of sovereign bonds, continues to deflate. If the world’s central bankers didn’t decide to play god over the cost of money, we wouldn’t be now going thru the aftermath.”
In the U.S., the 2-year yield, which is most susceptible to Fed rate hikes, was up 9.6 basis points Friday morning to 4.22%, up around 15-year highs. Similar surges are happening elsewhere, with 10-year gilts in the UK at 3.79%, the German 10-year bund around 2.03% and the Swiss 10-year at 2.34%.
In addition to the Fed, the Bank of England, Swiss National Bank and the central banks in the Philippines and Indonesia, among others, also approved sizeable rate hikes this week.
Stocks making the biggest moves premarket: Costco, Boeing, FedEx and more
Here are some of the stocks making the biggest moves in Friday’s premarket trading:
FedEx – FedEx remains on watch this morning after announcing a 6.9% increase in shipping rates and plans to cut another $4 billion in annual costs. FedEx fell 3.2% in the premarket.
Costco – Costco lost 3.3% in the premarket despite reporting better-than-expected profit and sales for its latest quarter after reporting operating margins that were slightly below consensus.
Boeing – Boeing lost 1.8% in the premarket after announcing it will pay $200 million to settle SEC charges that it made misleading claims about the safety risks of its 737 MAX jet after two of the planes were involved in fatal crashes.
Check out the full list of stocks moving in premarket trading here.
— Peter Schacknow, Samantha Subin
Futures at their lows
Stock futures are at their lows of the session having steadily declined the last four hours.
As for potential catalysts for the rollover, the 2-year Treasury yield has continued its march higher, topping 4.2% in overnight trading. The U.S. dollar is also continuing to climb which could weigh on U.S. multinationals. The dollar move comes as the U.K. unveiled new economic measures to revive its economy. Oil is also falling with WTI futures now off by 3.3%.
Goldman Sachs cuts S&P 500 price target to 3,600
Goldman Sachs sees the chances of a ‘hard landing’ resulting in a U.S. recession as more likely than ever following the Federal Reserve’s latest meeting and interest rate hike.
That will weigh on stocks through the end of the year. The firm on Thursday slashed its year-end target for the S&P 500 to 3,600 from 4,300. The current target implies that the index will fall more than 4% through the end of the year.
“The forward paths of inflation, economic growth, interest rates, earnings, and valuations are all in flux more than usual with a wider distribution of potential outcomes,” wrote David Kostin in a Thursday note. The bank also forecasts that in a recession, the S&P 500 could fall even further.
Energy stocks among biggest premarket losers
Energy shares were among the biggest losers in early premarket trading as crude futures rolled over on recession fears. WTI crude was down 2.5% to $81.33 a barrel.
Shares of Exxon Mobil, Chevron and Schlumberger were all down more than 2% in premarket trading.
Headed for a losing week
Here are key market stats for the week:
-The Dow is down -2.42% week-to-date, on pace for its 5th negative week in 6.
-The S&P is down -2.98% WTD, on pace for its 5th negative week in 6.
-The NASDAQ is down -3.33% WTD, on pace for its 5th negative week in 6.
-All sectors are negative for the week, led to the downside by Real Estate, down -5.21%. Consumer Staples is the best performer, down -0.42%.
CNBC Pro: Is it time to buy Treasurys? Here’s how to allocate your portfolio, according to the pros
Nomura downgrades China’s 2023 growth outlook
Nomura downgraded its forecast for China’s 2023 annual growth to 4.3% from 5.1%.
Analysts cited a potentially prolonged Covid-zero policy or a spike in the nation’s infections after a possible reopening in March.
The latest downgrade comes after Goldman Sachs lowered its outlook earlier this week to 4.5% from 5.3%.
William Ma of Grow Investment Group told CNBC’s “Street Signs Asia” he’s optimistic on policy changes he sees coming after the People’s Party Congress in mid-October.
CNBC Pro: Back hedge funds to outperform equities and bonds this year, UBS says
As both stocks and bond prices fall simultaneously, hedge funds have broadly outperformed and are “well placed to navigate current market volatility,” according to a new report by UBS.
As market volatility persists, the Swiss bank shared the types of hedge funds it prefers.
— Ganesh Rao
Costco, Scholastic shares fall after reporting earnings
Scholastic shares fell 3.3% after sharing declines of 82% and 74% in operating income and earnings before taxes in the first quarter compared to the same period a year ago. The children’s book maker saw a 1% increase in revenue.
Costco, the wholesale retail chain, was down about 2.6% after reporting its third-quarter earnings. Though the company posted expectation-beating increases in earnings per share and revenue that also marked improvements from a year ago, the company reported increases in freight and labor costs.
— Alex Harring
Futures start flat in post-market trading
Stock futures were flat after another tumultuous day, as investors continue grappling with the Federal Reserve’s decision to up rates and worries about the health of the economy.
Dow Jones Futures went up 41 points, or .14%, to 30,190. The S&P 500 was up 4 points, which translates to .11%, at 3,776. The Nasdaq 100 rose 10 points, .09%, to 11,575,50.
— Alex Harring