Wall Street ends lower, sinks deeper into bear market

Reuters

Published Sep 26, 2022 21:09

Updated Sep 27, 2022 06:09

By Noel Randewich and Shreyashi Sanyal

(Reuters) - Wall Street slid deeper into bear market territory on Monday, with the S&P 500 and Dow closing lower as investors fretted that the Federal Reserve's aggressive campaign against inflation could throw the U.S. economy into a sharp downturn.

After two weeks of mostly steady losses on the U.S. stock market, the Dow Jones Industrial Average confirmed it has been in a bear market since early January. The S&P 500 index confirmed in June it was in a bear market, and on Monday it ended the session below its mid-June closing low, extending this year's overall selloff.

With the Fed signaling last Wednesday that high interest rates could last through 2023, the S&P 500 has relinquished the last of its gains made in a summer rally.

"Investors are just throwing in the towel," said Jake Dollarhide, Chief Executive Officer of Longbow Asset Management in Tulsa, Oklahoma. "It's the uncertainty about the high-water mark for the Fed funds rate. Is it 4.6%, is it 5%? Is it sometime in 2023?"

Confidence among stock traders was also shaken by dramatic moves in the global foreign exchange market as sterling hit an all-time low on worries that the new British government's fiscal plan released Friday threatened to stretch the country's finances. [MKTS/GLOB]

That added an extra layer of volatility to markets worried about a global recession amid decades-high inflation. The CBOE Volatility index, hovered near three-month highs.

The Dow is now down about 20% from its record high close on Jan. 4. According to a widely used definition, ending the session down 20% or more from its record high close confirms the Dow has been in a bear market since hitting its January peak.

According to preliminary data, the S&P 500 lost 37.24 points, or 1.01%, to end at 3,655.99 points, while the Nasdaq Composite lost 65.39 points, or 0.60%, to 10,802.53. The Dow Jones Industrial Average fell 319.16 points, or 1.08%, to 29,271.25.