U.S. stocks cascaded on Thursday as recession jitters returned to Wall Street, tempering a rally from a temporary relief rally that spurred the Bank of England’s bond-buying move.
The S&P 500 plummeted 2.3% and the Dow Jones Industrial Average dropped more than 500 points (about 1.7%). The Nasdaq Composite fell more than 3%.
Technology stocks led the decline as heavily weighted Apple (AAPL) shares fell about 4.8% on concerns about falling demand that prompted a downgrade from Bank of America. In a note Thursday, analysts warned that BofA’s research team “expects a deterioration in the demand trajectory.”
Apple’s decline began Wednesday after reports said the tech giant was pulling back on plans to ramp up production of its new iPhones this year after demand for the product failed to meet expectations.
Elsewhere in corporate news, CarMax (KMX) stock cites an “affordability issue” that weighed on sales after reporting second-quarter earnings below Wall Street expectations. , down nearly 34%.
Bed Bath & Beyond (BBBY) fell 8% on Thursday, posting a wider quarterly loss for the company as merchandising and inventory disruptions and inflationary pressures hit home goods retailers.
On the economic data front, initial jobless claims for the week ending Sept. 24 fell to 193,000, the lowest since April, from a downwardly revised 213,000 the week before, the Labor Department said. said Thursday. Economists sought 215,000 claims, according to consensus estimates compiled by Bloomberg.
Elsewhere, the US Department of Commerce’s third measurement of Gross Domestic Product (GDP) shows that US economic activity contracted by 0.6% on an annualized basis.
New risk-off mood pacing all three major averages to give up gains after England’s central bank said Wednesday it would resume bond purchases to help stabilize financial and currency markets Put in. Investors welcomed the move away from aggressive monetary tightening in recent months by officials. The S&P 500, Dow and Nasdaq each rose about 2%.
EY-Parthenon chief economist Gregory Daco said in a note that “the speed and synchronization of rate hikes, coupled with the lack of appropriate policy adjustments, risks an excessive and chaotic tightening of financial conditions.”
“In the UK, the economic outlook has deteriorated recently as Prime Minister Liz Truss’ budget announcement led to a market crash, with bond yields soaring to their highest level since 2010 and the British pound plummeting to its lowest level. In 37 years,” Dako said.
UK 30-year bond yields hit a 20-year high before falling 100 basis points following Wednesday’s Bank of England intervention, which bought about £65bn ($69m) worth of long-term bonds Did.
Meanwhile, in the United States on Thursday, Treasury yields climbed at their fastest pace in decades, followed by a decline before a modest gain. On Wednesday, the benchmark 10-year Treasury Note, a key economic indicator, briefly hit 4%, marking a key milestone in the worst bond sale since 1949.
Atlanta Fed President Bostic said the Trans-Atlantic central bank’s decision to return to bond-buying did not change its view on the Fed’s policy, and the UK economy He said it did not add to fears that the wrongs would spread.
“We expect growth to be below trend, we will see demand for a wider range of products start to weaken and the labor market will start to become more rationalized,” Bostic said, adding that if job openings decline, it will added. In effect, authorities may consider stopping and holding at that level.
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Alexandra Semenova is a reporter at Yahoo Finance. follow her on her twitter @alexandraandnyc
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