Wall Street slips as investors worry about U.S. economic downturn

Sept 29 (Reuters) – Wall Street tumbled on Thursday on worries that the Federal Reserve’s aggressive fight against inflation could weigh on the U.S. economy and investors worried about a collapse in global currency and debt markets.

Tech-related heavyweights Tesla (TSLA.O), Apple (AAPL.O) and Nvidia (NVDA.O) fell 5 percent or more, and Nasdaq (.IXIC) neared its lowest level in mid-2022 Closing level for June.

The S&P 500 (.SPX) was on track for its lowest close since November 2020. It fell 8% in September.

The sell-off in U.S. Treasuries resumed as Fed officials did not signal that the U.S. central bank would moderate or change its plan to aggressively raise interest rates to reduce high inflation.

Cleveland Fed President Loretta Mester said she doesn’t think U.S. financial markets are in trouble, which would change the central bank’s actions to lower inflation by raising interest rates to bring the federal funds rate to a range of 3.0% to 3.25%.read more

The number of Americans filing for unemployment benefits fell to a five-month low last week, data showed, as the labor market remained resilient despite sharp interest rate hikes by the Federal Reserve.

“Good news is bad news, and today’s jobs data reiterates that the Fed has a long way to go,” said Phil Blancato, head of Ladenburg Thalmann Asset Management in New York. “The market is worried that the Fed is going to push us into a very deep recession, which will lead to an earnings recession, and that’s why the market is selling off.”

The yield on many U.S. Treasuries, which are effectively considered risk-free if held to maturity, now dwarfs the S&P 500’s dividend yield, which was recently around 1.8%, according to Refinitiv Datastream.read more

In afternoon trade, the Dow Jones Industrial Average (.DJI) lost 2.17% to 29,041.04, while the S&P 500 (.SPX) lost 2.72% to 3,617.89.

The Nasdaq Composite (.IXIC) fell 3.62% to 10,651.56.

All 11 sectors of the S&P 500 fell, with consumer discretionary (.SPLRCD) down 4% as auto stocks tumbled.

CarMax Inc (KMX.N) tumbled more than 20 percent after the used-car retailer missed estimates in the second quarter as consumers slashed spending amid inflation, higher interest rates and higher vehicle prices.

General Motors (GM.N) and Ford Motor (FN) were also hit hard, both down more than 6 percent.

Airlines and cruise operators have collapsed as travel is canceled or delayed after Hurricane Ian struck Florida’s Gulf Coast with catastrophic force.read more

American Airlines (AAL.O), United Airlines Holdings (UAL.O) and Delta Air Lines (DAL.N) all fell more than 4 percent.

Cruise companies Norwegian Cruise Line Holdings Ltd (NCLH.N) and Carnival Corp (CCL.N) fell 6.4 percent and 7.8 percent, respectively.

Declining issues outnumbered advancing ones on the NYSE by a 7.64-to-1 ratio; on Nasdaq, a 4.12-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 100 new lows; the Nasdaq Composite posted 6 new highs and 447 new lows.

Reporting by Susan Mathew, Ankika Biswas and Shreyashi Sanyal in Bengaluru; Additional reporting by Medha Singh; Editing by Anil D’Silva, Arun Koyyur and Jonathan Oatis

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