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Home BUSINESS The stock market ends an ugly quarter with another volatile day

The stock market ends an ugly quarter with another volatile day

Stocks were turbulent on Friday as they headed for a loss for the third quarter of the year, the first time the S&P 500 has posted three straight quarters of losses since the aftermath of the global financial crisis more than a decade ago.

The S&P 500 swings between gains and losses, moves that came after the government released another higher-than-expected inflation reading. The Federal Reserve is rapidly raising interest rates as it tries to moderate the pace of price increases, but persistent inflation raises the risk that it will need to raise rates even higher and end up inflicting too much damage on the economy.

The S&P 500 is on track for its third consecutive weekly decline and its third consecutive quarterly decline, the kind of losses investors haven’t faced since 2009. It’s on track to end the three months through September more than 3 percent lower, with a year-to-date loss of nearly 24 percent.

By raising borrowing costs for consumers and businesses, central banks around the world are trying to temper demand and slow the pace of price rises. That’s important for the long-term health of the economy, but it’s generally bad for stocks in the short term, as higher costs eat into profits.

“The conditions are not yet in place for a sustained change in market sentiment,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “In our view, such an improvement will require compelling evidence that the threat of inflation is receding.”

The fall in stocks caps off a wild week of trading, with a new crisis for investors emanating from Britain after a proposed tax cut stoked inflation fears and raised concerns about the country’s borrowing needs, caused sterling to drop sharply and government bond yields to soar.

The unexpected moves highlighted the challenges facing central banks around the world as they try to contain inflation and undo pandemic-era support measures for markets, with the Bank of England under pressure to step in and buy bonds again to help. to calm the markets of the consequences of the policies proposed by the government.

Government bond yields rose this week, but have been rising substantially all year. In the United States, the yield on the two-year Treasury note, which is sensitive to changes in Fed policy, rose nearly 3.5 percentage points this year to 4.17 percent, up sharply from 1. 22 percent in the third quarter alone. It puts performance on course for its biggest annual increase on record.

Higher rates and higher yields, as well as the relative economic health of the United States compared to other countries around the world, have attracted investment to Wall Street, helping to strengthen the dollar compared to a basket of other currencies that represent to major US trading partners. By that measure, the dollar just posted its biggest quarterly gain since the first quarter of 2015 and is the strongest in two decades.

Elsewhere, Europe’s Stoxx 600 was on track to end the quarter roughly 12 percent lower, its biggest quarterly loss since the first quarter of 2020 and the pandemic-induced market turmoil.

In Japan, the Topix index fell 7.9 percent for the three months to the end of September, while mainland China’s stock index, the CSI 300, fell more than 20 percent, its worst quarterly loss since the third quarter. from 2015.

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