Wall St falls on concerns over corporate earnings

U.S. stocks tumbled ahead of corporate third-quarter earnings as profit expectations plummet amid rising interest rates and stubborn inflation, while drugmaker Amgen’s earnings capped declines in the Dow Jones.

Analysts now expect earnings for S&P 500 companies to have risen 4.1% in the third quarter from a year ago, compared with an 11.1% rise expected in early July, the data shows. from Refinitiv.

Major U.S. banks are expected to release quarterly results on Friday that could give some insight into the health of the U.S. economy.

With recent labor market and inflation data suggesting further significant rate hikes by the US Federal Reserve, major Wall Street indexes have seen a losing streak in recent sessions on fears the economy could slipping into a recession.

The International Monetary Fund has cut its global growth forecast for 2023 and expects U.S. growth this year to be a meager 1.6%, down 0.7 percentage points from July, reflecting an unexpected contraction in the GDP in the second quarter.

“If we continue to get inflation data that shows no signs of slowing down, the Fed is not going to lay off, there is no Fed pivot coming,” said Dennis Dick, founder and analyst market structure at Triple D Trading Inc.

Money markets are now pricing in a 92% chance of another 75 basis point hike at the Fed’s meeting in November.

Amid growing expectations for another big hike in borrowing costs, the yield on the benchmark 10-year U.S. Treasury hit a daily high of 4.006%, while growth stocks incurred losses.

Microsoft Corp, Twitter Inc, Amazon.com, Apple Inc and Tesla Inc fell between 1.0% and 3.5%.

A consumer price report due Thursday will offer more clues on inflation, also focusing on minutes from the Fed’s September meeting due later in the week.

“Right now the market wants to see data, show me the numbers, show me we’re cutting inflation. Until then, this market is probably stuck in all this death by a 1,000-cut scenario,” Dick said.

The CBOE Volatility Index, also known as the Wall Street Fear Gauge, hit 33.57 points, up for a fourth consecutive session and approaching a nearly two-week high.

In early trading, the Dow Jones Industrial Average was down 57.94 points, or 0.20%, at 29,144.94, the S&P 500 was down 24.75 points, or 0.69%, at 3,587.64 and the Nasdaq Composite was down 92.97 points, or 0.88%, at 10,449.13.

Of the 11 major sector indices in the S&P 500, all but defensive consumer staples fell.

Helping to stem losses on the Dow, shares of Amgen Inc jumped 4.9% after a report said Morgan Stanley pushed the drugmaker’s shares from ‘overweight’ to ‘equal weight’ “.

Falling issues outnumbered advances by a ratio of 3.28 to 1 on the NYSE and by a ratio of 2.36 to 1 on the Nasdaq.

The S&P index recorded no new 52-week highs and 71 new lows while the Nasdaq recorded 10 new highs and 250 new lows.

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