Stocks resumed their 2022 selloff on Thursday, sending the S&P 500 to a new low for the year as fears swirled that a recession won’t stop the Federal Reserve from raising interest rates.
The sell-off was widespread and led by Apple, which collapsed when a major investment bank downgraded the once-best performer in the bear market. The stock closed down 4.9%.
The S&P 500 fell 2.1% to 3,640.47 in a new year-end low. During the session, it also fell to a new 2022 intraday low of 3,610.40. This is also its lowest intraday level since 2020.
Meanwhile, the Dow Jones Industrial Average plunged 458.13 points, or 1.54%, to 29,225.61. The Nasdaq Tech Composite fell 2.84%.
The moves followed a broad rally in stocks on Wednesday, as the Bank of England said it would buy bonds in an effort to help stabilize its financial markets and the pound’s slide. Sterling has been lowered to historical lows against the US dollar In recent days.
The Dow Jones gained more than 500 points, or 1.9%, on Wednesday, while the S&P 500 rose nearly 2%, snapping both six-day losing streaks.
″[We] remain skeptical that the calmer mood in markets on Wednesday marks the end of the recent period of heightened volatility or risk-off sentiment,” UBS’s Mark Haefele wrote in a Thursday note. “For a more sustained rally, investors will need to see convincing evidence that inflation is under control, allowing central banks to become less aggressive.”
The 10-year US Treasury yield rallied to a high of 3.7%. A day earlier, it posted its biggest one-day drop since 2020 after briefly topping 4%.
A stronger-than-expected jobless claims report did not help sentiment. This was based on the notion that the Fed will keep raising rates to fight inflation without worrying that it might hurt the labor market.
Cleveland Fed President Loretta Mester said in an appearance Thursday on CNBC’s “Squawk Box” that interest rates are not yet restrictive and said more needs to be done to reduce inflation.
The major averages are on track for a losing week and a month of sharp declines. The Nasdaq Composite leads the monthly losses, down 9.1%, while the Dow and S&P are on track to close September roughly 7.3% and 7.9% lower, respectively.
CNBC’s Sarah Min contributed reporting