Stocks drop to start a busy week with earnings and inflation data

US stocks extended their downtrend on Monday as Led Wall Street to the third quarter earnings season And prepared for a batch of inflation reports.

Nasdaq Technology Heavy Vehicle (^ ninth) led the way down, dropping 1.2% to a two-year low with a raft of new restrictions by the Biden administration on China’s access to US technology. Send chip stocks and burdening the broader technology sector. S&P 500 Index (^ Salafist Group for Preaching and Combat(Down 0.9% and the Dow Jones Industrial Average)^ DJI) It fell 150 points or 0.5%.

The declines accelerated in the afternoon as investors weighed on comments by JPMorgan (JPM) CEO Jamie Dimon points out The US economy is likely to enter a recession In six to nine months. Dimon told CNBC at a conference in London that inflation, Russia’s war in Ukraine, and the impact of a Fed rate hike are creating a “very, very dangerous” mix that could lead to economic deflation, also adding that Europe is already in a recession. .

Technology shares received the brunt of the selling on Monday as chip stocks fell. Measures imposed by the United States to limit China’s access to semiconductors are intended to slow the country’s technological and military progress, but they deal another blow to an industry already struggling with poor revenue as demand for computers, smartphones and other electronic devices slows. Shares of major chip manufacturers including Nvidia (NVDA) and AMD (AMD) by 4% and 2%, respectively.

CBOE Volatility Index (^ VIX), which measures the short-term outlook for market turmoil, rose above 33. Treasury yields extended their recent high. Oil is down after rising 17% last weekThis is the biggest jump since Russia invaded Ukraine.

The moves come after a volatile week that began with a violent rally and Concluded with a sharp sale Which erased much of the resulting gains. The most recent slip was driven by Strong jobs report for the month of September That assured investors Fed officials It is unlikely to turn away from restrictive monetary policy anytime soon.

The benchmark S&P 500 is down 23.6% year-to-date as of Friday’s close, but nine individual trading days include that full 32-point drop, according to Nicholas Colas of DataTrek Research.

He added that the largest share of the days of decline occurred around the Consumer Price Index (CPI) or Fed-related events, one of which was driven by tensions between Russia and Ukraine, and two came on the heels of poor corporate earnings releases. Next week, all these factors are expected to test the US stock market.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, October 7, 2022. REUTERS/Brendan McDermid

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, October 7, 2022. REUTERS/Brendan McDermid

Investors are bracing for the bank’s earnings spree that usually marks the start of a new earnings-reporting period, with results from JPMorgan (JPM), city (c), Wells Fargo (WFC), and Morgan Stanley (Ms) All are due. Other companies scheduled to report this week include PepsiCo (PEPand Delta AirlinesDA).

Analysts prepare for Painful earnings season Ongoing inflation, rising interest rates and geopolitical headwinds affect corporate profits.

“The bear market won’t end until the deteriorating fundamental picture is completely ruled out,” Mike Wilson, chief equity strategist at Morgan Stanley, said in a note.

Also on Wall Street Consumer price data for September, which is one of the most important reports ahead of the upcoming policy-setting meeting of the Federal Open Market Committee in November. While the headline reading is expected to dip again, all eyes will be on the “core” component of the report, which excludes volatile food and energy categories. Bloomberg’s core CPI rose to 6.5% from 6.3% during the year, according to the latest estimates.

“Volatility in the equity and fixed income markets will continue until there is a clear indication that inflation is under control,” Peter Essely, Head of Portfolio Management at Commonwealth Financial Network, said in a recent note.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed

Click here for the latest trending stock indices for Yahoo Finance

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app for apple or Android

Follow Yahoo Finance on TwitterAnd the FacebookAnd the InstagramAnd the FlipboardAnd the LinkedInAnd the Youtube

Leave a Comment