Wall Street drops to two-month lows as recession fears mount

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Financial markets on Wednesday priced in an 18 percent chance of an outsized 100 basis point hike in the Fed’s target fund rate, according to CME’s FedWatch tool.

The Dow Jones Industrial Average fell 139.4 points, or 0.45 percent, to 30,822.42, the S&P 500 lost 28.02 points, or 0.72 percent, to 3,873.33 and the Nasdaq Composite fell 103.95 points, or 0 .9 percent to 11,448.40.

Nine of the S&P 500’s 11 major sectors ended in negative territory, with energy and industrials suffering the largest percentage declines.

Dow Transports, considered a barometer of economic health, fell 5.1 percent.

That decline was led by FedEx stocks, which fell 21.4 percent, the biggest drop in the S&P 500.

Peers United Parcel Service and XPO Logistics fell 4.5 percent and 4.7 percent, respectively, while Amazon.com fell 2.1 percent.

The meeting also marked the monthly options expiration, which takes place on the third Friday of each month. Options hedging activity has amplified market movements this year and contributed to increased volatility.

The CBOE market volatility index, often referred to as the “fear index,” hit a two-month high, surpassing levels associated with heightened investor anxiety.

Declining issues predominated on the NYSE at a 3.04 to 1 ratio; on the Nasdaq, a 2.24 to 1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 56 new lows; the Nasdaq Composite posted 21 new highs and 387 new lows.

Volume on US exchanges was 16.92 billion shares compared to the average of 10.72 billion for the entire session over the last 20 trading days.

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