US stocks fell sharply in midday trading Thursday, more than erasing their gains from Their biggest rally in three weeks after a flurry of upbeat economic data and a warning from hedge fund giant David Tepper that he is “shorting” both stocks and bonds on expectations the Federal Reserve and central banks Others will continue to tighten policy until 2023.
Positive economic news can be a negative for equities by underscoring expectations that monetary policymakers will remain positive in their efforts to contain inflation.
What’s going on
-
Dow Jones Industrial Average
DIA,
-2.21% fell 676 points, or 2%, to 32,698.
-
S&P500
SPX,
-2.73% fell 99 points, or 2.6%, to 3,778.
-
Nasdaq Composite
CALCULATOR,
-3.48% down 365 points, or 3.4%, to 10,345.
On Wednesday, all three major indexes recorded their best gain in three weeks when the Dow rose 526.74 points.
What is driving the market?
Investors saw another set of strong economic data on Thursday morning, including revised third-quarter gross domestic product that showed the U.S. economy expanded faster than anticipated. before. Growth has been revised up to 3.2%, up from 2.9% on the previous update released last month.
See: Economy grew at a 3.2% pace in the third quarter on strong consumer spending
Number of Americans filing for unemployment benefits in the week before Christmas slightly increased to 216,000 VND, but the number of new applications remains low and signals the labor market is still quite strong. Economists polled by The Wall Street Journal had forecast total new claims would be 220,000 in the seven days ending December 17.
“A slight but lower-than-expected increase in jobless claims could be a sign of hope,” said Mike Loewengart, head of modeling portfolio construction at Morgan Stanley Global Investments. The Fed’s desire for a slowing labor market will have to wait until 2023.” comment.
“It is not surprising to see the market take a break today after yesterday’s rally as investors pored over earnings data and despite some beating this week, expectations,” he wrote. that earnings will remain so stable in 2023 may be overblown.”
Shares are under pressure after Appaloosa Management’s Tepper shared a cautious outlook for the market based on expectations that central banks around the world will continue to raise interest rates.
“I can say I’m missing the stock market right now because I don’t understand trend reversals when I have so many people, so many central banks, telling me what they’re going to do, what to do. they want to do, what they aspire to do,” Tepper said in a CNBC interview.
The day before that, the Conference Board’s consumer confidence survey hit an eight-month high, helped fuel a stock rally that was initially fueled by high earnings from Nike Inc. and FedEx Corp. announced on Tuesday evening. This optimistic view helped the stock hit its best daily performance in three weeks.
Volume is starting to dry up as the year ends, leaving the market vulnerable to bigger moves. According to Dow Jones Market Data, Wednesday saw the least combined volume across major exchanges since Nov.
Read: Is the stock market open on the Monday after Christmas Day?
In other economic data news, the US leading index plummeted 1% in November, showing that The US economy is headed for a recession.
Many market strategists are on the defensive because they think stocks could drop to new year lows.
Katie Stockton, a technical strategist at Fairlead Strategies, warned clients in a note Thursday that they should brace themselves for upcoming price drops.
“We expect the major indexes to hold steady next week, supported by oversold conditions, but brace for more January declines driven by the downturn,” Stockton said. recently”.
Others said the latest data and comments from Tepper simply led investors to refocus on the Fed, the European Central Bank and now the Bank of Japan. is preparing to continue tightening monetary policy.
“Yesterday was a short-term rally, but the bottom line is that the trend is still short-term and we are still against the Fed,” said Eric Diton, chairman and chief executive officer of Wealth Alliance.
One-stock movers
-
Shares of AMC Entertainment Corporation
AMC,
-15.28% fell 16.1% after the cinema operator announced a $110 million equity raise.
-
Tesla Corporation
TSLA,
-9.42% share continued to decline as the company was one of the worst performing companies on the S&P 500 this year. Tesla shares fell 9.3%.
-
Shares of Verizon Communications Corporation
VZ,
-1.04% fell 1% on Thursday when the company topped for the worst year on record.
-
Shares of CarMax Co
KMX,
-6.47% down 6.7% after used car sellers report profits and sales for the third fiscal quarter fell below expectations.
-
Chip manufacturers and suppliers of equipment and materials, including Nvidia Corporation
NVDA,
-9.23% ,
Advanced micro-devices
AMD,
-7.39% and Applied Materials Inc.
amateur,
-8.70% ,
was lower on Thursday.
— Steve Goldstein contributed reporting
