Stocks surge as Wall Street prepares for Fed meeting

Stocks surge as Wall Street prepares for Fed meeting

U.S. stocks fell on Monday, extending a streak of straight trading after all three major indexes posted their worst week in three months.

The S&P 500 fell about 0.2%, while the Dow Jones Industrial Average fell 0.1%, or about 30 points. The tech heavyweight Nasdaq fell 0.3%.

In the bond market, the benchmark US 10-year note jumped to 3.49%, its highest level since 2011, while the 2-year Treasury rose from a 15-year high of 3.9%.

Investors are gearing up for the Federal Reserve’s two-day policy meeting on September 20-21. The US central bank is expected to deliver a third straight hike of 75 basis points at the end of talks on Wednesday at 2:00 p.m.

Higher-than-expected inflation data last week triggered a sell-off across US stock markets after renewed fears that the Fed will increase the size of its monetary tightening efforts and push the economy into recession. The benchmark S&P 500 fell 4.7% for the week, the Dow Jones Industrial Average fell 4.1% and the tech-heavy Nasdaq Composite fell 5.5%.

An earnings warning from shipping giant FedEx ( FDX ) also exacerbated growth concerns on Friday after the company said a global recession could be under way, withdrawing its full-year guidance on macroeconomic trends that have “significantly worsened”.

NEW YORK, NEW YORK - SEPTEMBER 16: Traders work on the floor of the New York Stock Exchange (NYSE) on September 16, 2022 in New York City.  The Dow Jones industrial average fell again on Friday as economic concerns over inflation and global corporate earnings of transportation companies eased.  (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – SEPTEMBER 16: Traders work on the floor of the New York Stock Exchange (NYSE) on September 16, 2022 in New York City. The Dow Jones industrial average fell again on Friday as economic concerns over inflation and global corporate earnings of transportation companies eased. (Photo by Spencer Platt/Getty Images)

Of the S&P 500 companies that held earnings calls from June 15 to Sept. 8, 240 mentioned the term “recession” — the highest number to mention the term since at least 2010 and well above the 52-year average. according to data from FactSet Research.

As investors enter the earnings season, Wall Street strategists are sounding the alarm on earnings expectations, with macroeconomic headwinds such as inflation and interest rate pressures increasingly showing signs of weighing on corporate earnings. margins.

Bank of America’s Michael Hartnett warned in a recent note that earnings cuts will be the catalyst for a deeper sell-off, and he sees the S&P 500 climbing toward 3,600 – and even 3,000 in the bear’s case. As of Friday’s close, the index was at 3873.33 points.

As Fed concerns kept investors in a risk-on mood, sentiment was also felt across cryptocurrency markets. Bitcoin (BTC-USD) slipped below $19,000 and Ethereum (ETH-USD) extended a slide to approach the $1,300 level after its much-anticipated “merger” last week.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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