Wall Street retreats as Fed worries outweigh earnings
2022.10.20 15:19
Wall Street retreats as Fed worries outweigh earnings
Budrigannews.com – U.S. stocks fell on Thursday as data on the labor market and comments from a U.S. Federal Reserve official reinforced expectations the central bank will be aggressive in hiking interest rates and overshadowed a flurry of solid earnings.
Stocks were initially higher, boosted by gains in names such as IBM (NYSE:), up 4.81%, after the IT services company beat quarterly earnings estimates on Wednesday and said it expects to exceed full-year revenue growth targets. AT&T Inc (NYSE:) surged 7.53% upon raising its annual profit forecast.
But stocks were unable to hold their gains as strong weekly jobless claims and comments from Federal Reserve Bank of Philadelphia President Patrick Harker bolstered concerns about the Fed hiking rates and potentially tilting the economy into a recession.
Harker said the Fed is not done raising its short-term rate target as high inflation persists.
The market was reviewing weekly unemployment claims data which came in low given the Fed’s target, said Tony Roth, chief investment officer at Wilmington Trust in Wilmington, Delaware.
“That is something the market has to digest not just for five minutes but over the course of the day as other news starts to abate or fall away,” he added.
The fell 102.24 points, or 0.34%, to 30,321.57, the lost 31.72 points, or 0.86%, to 3,663.44 and the dropped 77.50 points, or 0.73%, to 10,603.01.
Dow Inc advanced 0.69% after the chemicals giant beat third-quarter profit estimates.
Better-than-expected results thus far has pushed earnings growth expectations for third-quarter for S&P 500 companies to 3.1% from a 2.8% increase earlier in the week, but still well below the 11.1% increase that was forecast at the start of July.
Tesla (NASDAQ:) Inc, however, slumped 7.14% as the electric-vehicle maker flagged persistent logistics challenges, with fourth-quarter deliveries growing by less than the aimed 50%.
Stocks have been under pressure for year as concerns about the impact of the Fed’s aggressive path of interest rate hikes on corporate earnings and the overall economy have mounted as the central bank tries to quell stubbornly high inflation.
Other data showed sales of existing homes fell for an eight straight month, while another reading showed factory activity in the Federal Reserve Bank of Philadelphia’s district contracted again in October.
The U.S. central bank is widely expected to announce a fourth straight 75 basis-point hike at its November meeting, with an outside chance of a full percentage point increase.
Declining issues outnumbered advancing ones on the NYSE by a 2.07-to-1 ratio; on Nasdaq, a 1.38-to-1 ratio favored decliners.
The S&P 500 posted 3 new 52-week highs and 23 new lows; the Nasdaq Composite recorded 40 new highs and 204 new lows.
