Stocks end September down 9.3%, worst month since March 2020

Sep 29, 2022, 10:23 PM | Updated: Oct 2, 2022, 2:06 am
FILE - Pedestrians pass the New York Stock Exchange, Thursday, May 5, 2022, in the Manhattan boroug...

FILE - Pedestrians pass the New York Stock Exchange, Thursday, May 5, 2022, in the Manhattan borough of New York. Stocks are opening lower on Wall Street, Friday, Sept. 30, on pace to close out another losing month. (AP Photo/John Minchillo, File)

(AP Photo/John Minchillo, File)

Wall Street closed out a miserable September on Friday with the S&P 500’s worst monthly skid since March 2020, when the coronavirus pandemic crashed global markets.

The benchmark index ended the month with a 9.3% loss and posted its third straight losing quarter. It’s now at its lowest level since November 2020 and is down by more than a quarter since the start of the year.

The main reason financial markets continue to struggle is fear about a possible recession, as interest rates soar in hopes of beating down the high inflation that’s swept the world.

“Quite frankly, if it’s a deep recession you’re going to have to see more of a sell-off,” said Quincy Krosby, chief equity strategist for LPL Financial. “This is what the market is trying to navigate now.”

The Federal Reserve has been at the forefront of the global campaign to slow economic growth and hurt job markets just enough to undercut inflation but not so much that it causes a recession. On Friday, the Fed’s preferred measure of inflation showed it was worse last month than economists expected. That should keep the Fed on track to keep hiking rates and hold them at high levels a while, raising the risk of it going too far and causing a downturn.

Vice Chair Lael Brainard was the latest Fed official on Friday to insist it won’t pull back on rates prematurely.

“At this point, it’s not a matter of if we’ll have a recession, but what type of recession it will be,” said Sean Sun, portfolio manager at Thornburg Investment Management.

All told, the S&P 500 fell 54.85 points, or 1.5%, to close at 3,585.62 Friday, after flipping between small losses and gains in the early going. It has now posted a weekly loss in six out of the last seven weeks.

The Dow Jones Industrial Average dropped 500.10 points, or 1.7%, to 28,725.51. The Nasdaq composite slid 161.89 points, or 1.5%, to 10,575.62. The tech-heavy index sank 10.5% in September and is down 32.4% so far this year.

Smaller company stocks also had a rough September. The Russell 2000 ended the month down 9.7%. On Friday, it lost 10.21 points, or 0.6%, to 1,664.72.

Higher interest rates knock down one of the main levers that set prices for stocks. The other lever also looks to be under threat as the slowing economy, high interest rates and other factors weigh on corporate profits.

Cruise ship operator Carnival dropped 23.3% for the biggest decline among S&P 500 stocks after it reported a bigger loss for its latest quarter than analysts expected and revenue that fell short of expectations. Rivals Norwegian Cruise Line and Royal Caribbean Group slid 18% and 13.2%, respectively.

Nike slumped 12.8%, its worst day in more than 20 years, after it said its profitability weakened during the summer because of discounts needed to clear suddenly overstuffed warehouses. The amount of shoes and gear in Nike’s inventories swelled by 44% from a year earlier.

This year’s powerful surge for the U.S. dollar against other currencies also hurt Nike. Its worldwide revenue rose only 4%, instead of the 10% it would have if currency values had remained the same.

Nike isn’t the only company to see its inventories balloon. So have several big-name retailers, and such bad news for businesses could actually mean some relief for shoppers if it leads to more discounts. It echoed some glimmers of encouragement buried within Friday’s report on the Fed’s preferred gauge of inflation. That showed some slowing of inflation for goods, even as price gains kept accelerating for services.

Another report on Friday also offered a glimmer of hope. A measure of consumer sentiment showed U.S. expectations for future inflation came down in September. That’s crucial for the Fed because tightly held expectations for higher inflation can create a debilitating, self-reinforcing cycle that worsens it.

Treasury yields initially eased a bit on Friday, letting off some of the pressure that’s built on markets, but then turned higher by late afternoon.

The yield on the 10-year Treasury rose to 3.81% from 3.79% late Thursday. The two-year yield, which more closely tracks expectations for Fed action, rose to 4.23% from 4.19%.

Not all stocks took a beating in September. Biogen soared 35%, but it was an outlier. FedEx was among the market’s biggest losers, ending the month 29.6% lower.

Looking at the third quarter, which included a market rally in July, Netflix was among the best performers, climbing 34.6%. It’s still down 60.9% for the year.

A long list of other worries continues to hang over global markets, including increasing tensions between much of Europe and Russia following the invasion of Ukraine. A controversial plan to cut taxes by the U.K. government also sent bond markets spinning recently on fears it could make inflation even worse. Bond markets calmed a bit only after the Bank of England pledged mid-week to buy however many U.K. government bonds are needed to bring yields back down.

The stunning and swift rise of the U.S. dollar against other currencies, meanwhile, raises the risk of creating so much stress that something cracks somewhere in global markets.

Stocks around the world were mixed after a report showed that inflation in the 19 countries that use Europe’s euro currency spiked to a record and data from China said that factory activity weakened there.

—-

AP Business Writers Joe McDonald and Matt Ott contributed.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Elderly residents are evacuated by a local organization from the southern city of Kherson, Ukraine,...
Associated Press

Ukraine on edge for more attacks, West eyes humanitarian aid

KYIV (AP) — Ukraine prepared for more Russian strikes on Monday and warned of the possibility for a new round of evacuations from the capital during a relative lull from the airstrikes on energy facilities and other key infrastructure in recent weeks. In the West, meanwhile, preparations were stepped up to boost humanitarian aid to […]
5 hours ago
Wreaths hang on the Truman Balcony of the White House in Washington, Sunday, Nov. 27, 2022. (AP Pho...
Associated Press

‘We the People’ is the White House’s theme for the holidays

WASHINGTON (AP) — Drawing decorating inspiration from America’s founding documents, Jill Biden chose a “We the People” theme to deck the White House halls and to remind Americans of what unites them throughout the year, especially during the holidays. Journalists were given a sneak peek early Monday before the first lady was to unveil the […]
5 hours ago
FILE - Holding cells are visible in a basement of a police station that was used by Russian forces ...
Associated Press

Biden boosts US effort to stem sexual violence in war zones

WASHINGTON (AP) — President Joe Biden is strengthening U.S. policy aimed at stemming sexual violence in war conflict zones, elevating the problem — increasingly documented in Ukraine and elsewhere — to the level of a possible serious human rights abuse that triggers sanctions and other actions against foreign perpetrators. Biden, a Democrat, on Monday will […]
5 hours ago
FILE - Sen. Jacky Rosen, D-Nev., speaks during a Senate Homeland Security and Governmental Affairs ...
Associated Press

Democrats kept the Senate this year, but 2024 may be harder

NEW YORK (AP) — Democrats celebrating a successful effort to keep control of the U.S. Senate this year will soon confront a 2024 campaign that could prove more challenging. The party enters the next cycle defending 23 seats, including two held by independents who caucus with Democrats. That’s compared with just 10 seats that Republicans […]
5 hours ago
Associated Press

Water levels in Zimbabwe’s biggest dam too low for power

HARARE, Zimbabwe (AP) — Electricity shortages that have been plaguing Zimbabwe are set to worsen after an authority that manages the country’s biggest dam said water levels are now too low to continue power generation activities. The Zambezi River Authority, which runs the Kariba Dam jointly owned by Zimbabwe and neighboring Zambia, said in a […]
5 hours ago
FILE - The Federal Correctional Institution is shown in Dublin, Calif., July 20, 2006. The former w...
Associated Press

Ex-prison warden faces trial over inmate abuse allegations

The former warden of an abuse-plagued federal women’s prison known as the “rape club” goes on trial Monday, accused of molesting inmates and forcing them to pose naked in their cells. Ray J. Garcia, who retired after the FBI found nude photos of inmates on his government-issued phone last year, is among five workers charged […]
5 hours ago

Sponsored Articles

(Desert Institute for Spine Care photo)...
DESERT INSTITUTE FOR SPINE CARE

Why DISC is world renowned for back and neck pain treatments

Fifty percent of Americans and 90% of people at least 50 years old have some level of degenerative disc disease.
...
Children’s Cancer Network

Children’s Cancer Network celebrates cancer-fighting superheroes, raises funds during September’s Childhood Cancer Awareness Month

Jace Hyduchak was like most other kids in his kindergarten class: He loved to play basketball, dress up like his favorite superheroes and jump as high as his pint-sized body would take him on his backyard trampoline.
...
SCHWARTZ LASER EYE CENTER

Key dates for Arizona sports fans to look forward to this fall

Fall brings new beginnings in different ways for Arizona’s professional sports teams like the Cardinals and Coyotes.
Stocks end September down 9.3%, worst month since March 2020