Raindrops hang from a Wall Street sign outside the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar/File Photo
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- FedEx’s profit notice goes out to its peers
- All three major indices are set for heavy weekly losses
- Indexes down: Dow 0.97%, S&P 1.23%, Nasdaq 1.52%
Sept 16 (Reuters) – Wall Street’s main indexes hit near two-month lows on Friday after FedEx’s global delivery profit warning spooked investors already worried about aggressive rate hikes from the Federal Reserve that tipped the economy toward a recession.
The benchmark S&P 500 (.SPX) fell below the 3,900 mark, seen by many traders as a key support level, fueling speculation that there could be more selling in equity markets.
FedEx Corp shares plunged 22.9% and were on pace for the worst day on record after the company said the slowdown in global demand accelerated in late August and predicted it would worsen in the quarter november Read more
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Rivals UPS ( UPS.N ) and XPO Logistics ( XPO.N ) fell 4.4 percent and 6.8 percent, respectively, while Amazon.com Inc ( AMZN.O ) fell 2.9 percent .
All 11 S&P sectors declined, led by a 2.3% decline in the industrials sector (.SPLRCI). The Dow Jones Transport Average (.DJT) fell 5.1%.
“What people are worried about is this canary in the coal mine, we’re starting to see some warnings from some companies in different industries that suggest the outlook may be worse than we’ve been pricing in,” he said. Todd Lowenstein, Equity Strategist at Private. Bank at Union Bank.
“The market is kind of dragging and dragging for the most part. On the one hand you have these rapidly deteriorating fundamentals, on the other hand there was this what I call a misplaced hope for some kind of resurrection of the Fed pivot. The market is increasingly accepting that the Fed will not be there to save the day.”
The US Fed is expected to offer a third consecutive rate hike of 75 basis points at its September 20-21 meeting after recent data failed to alter the expected course of aggressive policy tightening .
Adding to the gloomy mood, the World Bank projected that the global economy could be inching towards a recession, while the International Monetary Fund said it expected a slowdown in the third quarter. Read more
September, which is a seasonally weak period for markets, will also see the Fed increase its balance sheet liquidation to $95 billion per month, a move some investors fear could add to market volatility and weigh on economy
At 11:56 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 301.21 points, or 0.97%, at 30,660.61, the S&P 500 (.SPX) was down 47.81 points, or 1.23%, to 3,853.54, and the Nasda. The Composite (.IXIC) fell 176.13 points, or 1.52%, to 11,376.23.
On the other hand, the monthly options expiration week, which ends on the third Friday of each month, has been marked by higher volatility than usual this year, as options hedging activity has amplified the market movements.
Goldman Sachs strategists said in a note that about $3.2 trillion of options expire on Friday, including $509 billion of options on individual stocks.
US stocks have fallen in 7 of the last 8 weeks of options expiration this year
On average, the S&P 500 has fallen 1.8 percent in option expiration weeks, compared with an average weekly gain of 0.09 percent in non-expiration weeks, according to a Reuters analysis.
The CBOE Volatility Index (.VIX), also known as Wall Street’s fear gauge, rose to 27.27 points.
All three indexes are poised for a sharp weekly decline, with the Nasdaq (.IXIC) down 6.1%.
Declining issues outnumbered advancing ones by a ratio of 5.27 to 1 on the NYSE and by a ratio of 4.04 to 1 on the Nasdaq.
The S&P index posted no new 52-week highs and 53 new lows, while the Nasdaq posted seven new highs and 281 new lows.
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Reporting by Shreyashi Sanyal, Medha Singh, Devik Jain, Ankika Biswas and Sruthi Shankar in Bangalore and Saqib Ahmed in New York; Editing by Shounak Dasgupta, Sriraj Kalluvila and Maju Samuel
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