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Stock market sell-off deepens as Nasdaq falls 3%


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“There is currently a lot of uncertainty in this market about whether or not this recession will continue”

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Reuters

Amruta Khandekar and Devik Jain

A trader works on the trading floor of the New York Stock Exchange. A trader works on the trading floor of the New York Stock Exchange. Photo by Andrew Kelly/Reuters

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The Nasdaq and S&P 500 fell 3 percent on Wednesday as a rally in growth stocks eased amid concerns about economic growth, while Target plunged to the bottom of the S&P 500 after the retailer became the latest victim of rising prices.

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At 12:08 PM ET, the Dow Jones Industrial Average was down 836.46 points, or 2.56 percent, to 31,818.13, the S&P 500 fell 125.35 points, or 3.07 percent, to 3,963.50, and the Nasdaq Composite fell 432. ,54 points. or 3.61 percent, against 11,551.99.

The Canadian TSX fell 311.49 to 20,179.52.

Target Corp’s profits halved in the first quarter and the company warned of a wider margin due to rising fuel and freight costs. Shares fell 25.2 percent, following their worst day since the Black Monday crash on October 19, 1987.

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The retailer’s results come a day after rival Walmart Inc cut its profit forecast. The SPDR S&P Retail ETF fell 8.2 percent.

All 11 major S&P sectors fell, with consumer discretionary and technology stocks falling 5.7 percent and 3.5 percent, respectively.

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Rising inflation, the conflict in Ukraine, protracted supply chain turmoil, pandemic-related lockdowns in China and the prospect of aggressive policy tightening by central banks have weighed on markets of late, fueling concerns about a global economic slowdown.

Wells Fargo Investment Institute on Wednesday revised its economic forecast to make a mild recession in the US for late 2022 and early 2023, based on economic data.

Federal Reserve Chairman Jerome Powell promised Tuesday that the US central bank will raise interest rates as high as necessary to offset the rise in inflation.
Traders are anticipating a 50 basis point rate hike by the Fed in June and July.

“Part of the market is definitely targeting a potential slowdown in growth,” said Zachary Hill, director of portfolio management at Horizon Investments.
“The Fed is committed to tightening financial conditions, which means lower stock valuations and wider credit spreads.”

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The S&P 500 is down 16.8 percent so far in 2022 and the Nasdaq is down more than 26 percent, hit by growth stocks.

“We are pricing in a growth spurt,” Lori Calvasina of RBC Capital Markets told Bloomberg TV. “The market is trying to find a bottom here. There is currently a lot of uncertainty in this market about whether or not this recession will continue or whether it will be another near-death experience.”

Equity valuations, as measured by the forward price-to-earnings ratio, have fallen sharply in recent weeks, which has increased the appeal of equities for some investors.

“Until we have clarity (about the Fed), markets will remain volatile,” said Brooke May, managing partner at investment advisory firm Evans May Wealth.

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“But right now, valuations are starting to look attractive and while it could go lower, these are pretty fair valuations, so hopefully we’re getting close to a bottom.”

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The level of liquidity among investors reached the highest level since September 2001.

‘Extremely bearish’ investors hoard cash at its highest level in two decades

Price-sensitive Big Tech and growth companies such as Microsoft Corp, Apple Inc, Google owner Alphabet Inc, Meta Platforms, Tesla Inc and Amazon.com fell between 3.5 percent and 6.0 percent after a sharp rebound in the previous session.

The CBOE volatility index, also known as the Wall Street fear meter, rose to 29.54 points after falling for six consecutive sessions.

The number of declining issuances surpassed the avant-garde with a 4.97-to-1 ratio on the NYSE and a 3.07-to-1 ratio on the Nasdaq.

The S&P index recorded a new 52-week high and 32 new lows, while the Nasdaq recorded 24 new highs and 129 new lows.

© Thomson Reuters 2022

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This post Stock market sell-off deepens as Nasdaq falls 3%

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