A slew of strong corporate earnings were not enough to prevent the United States stock market from closing lower on Thursday. This was due to the fact that data on the labour market and comments from a US Federal Reserve official reinforced expectations that the central bank will be aggressive in hiking interest rates.
The market opened with gains, led by gains in names such as IBM, which increased by 4.73% after the IT services company beat quarterly earnings estimates on Wednesday and said it expects to exceed full-year revenue growth targets. The market continued to rise throughout the first part of the trading session. After AT&T Inc. announced an increase to its annual profit prediction, the stock rose 7.72%.
However, stock prices were unable to maintain their gains as a result of rising jobless claims on a weekly basis and comments made by the president of the Federal Reserve Bank of Philadelphia, Patrick Harker. These factors combined to heighten investors’ concerns about the Federal Reserve increasing interest rates and possibly pushing the economy into a recession.
As strong inflation continues, Federal Reserve Board Governor Harker said that the Fed is not through boosting its short-term rate objective. This helped to drive the yield on the 10-year US Treasury note to its highest level since June 2008, which was 4.239%.
“I’m not sure we are going to be able to see that pause that a few Fed members have been pointing to and that definitely a few market players have been sort of grabbing on to,” said the Fed’s Charles Plosser. “I’m not sure we are going to be able to see that pause.”
The Dow Jones Industrial Average sank 90.22 points, or 0.3%, to a new all-time low of 30,333.59, the S&P 500 plummeted 29.38 points, or 0.80%, to a new all-time low of 3,665.78, and the Nasdaq Composite slid 65.66 points, or 0.61%, to a new all-time low of 10,614.84.
As a result of results that have been better-than-anticipated so far, earnings growth expectations for the third quarter for companies included in the S&P 500 have been increased to 3.1% from a 2.8% increase earlier in the week. However, this is still a significant drop from the 11.1% increase that was anticipated at the beginning of July.
The electric car manufacturer Tesla Inc. reported continued logistical issues, resulting in fourth-quarter deliveries expanding by less than the planned 50%. As a result, Tesla’s stock decreased by 6.65%.
This year, the stock market has been under pressure as concerns about the impact of the Federal Reserve’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. The Fed’s aggressive path of interest rate hikes comes as the Fed is trying to quell stubbornly high inflation.
Other readings suggested that manufacturing activity in the area served by the Federal Reserve Bank of Philadelphia shrank even more in October, while others indicated that existing house sales had dropped for the eighth consecutive month.
At its meeting in November, the Federal Reserve of the United States is almost certain to announce a fourth consecutive rise of 75 basis points, and there is also a remote possibility that they may announce an increase of one full percentage point.
The volume of shares traded on US exchanges came in at 11.37 billion, which is lower than the average of 11.62 billion shares traded for a full session over the course of the previous 20 trading days.
On the NYSE, declining stocks outnumbered those that were advancing by a ratio of 2.12 to 1, while on the Nasdaq, the ratio favoured declining items by 1.34 to 1.
The S&P 500 had three new 52-week highs and twenty-eight new lows, but the Nasdaq Composite recorded fifty-three new highs and two hundred and ninety-eight new lows.