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Wall Street falls fourth straight day as recession worries nag

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Wall Street equities closed lower on Monday for a fourth straight session with Nasdaq leading declines as investors shied away from riskier bets, worried the Federal Reserve’s tightening campaign could push the U.S. economy into a recession.

The three major U.S. stock indexes have been pressured since Wednesday, when Fed Chair Jerome Powell took a hawkish tone when the central bank raised interest rates. Powell promised further increases even as weak data showed signs of a weakening economy.

The S&P 500 (.SPX), the Dow Jones industrials (.DJI) and the Nasdaq have sold off sharply for December and are on track for their biggest annual declines since the 2008 financial crisis.

U.S. Treasury yields gained as investors girded for a potential recession in 2023, forsaking stocks for safer options, according to Brian Overby, senior markets strategist at Ally.

“Investors are asking why do I want to take those risks going into 2023 with the Fed’s stance still aggressive when I can get such a good yield on the fixed income market place,” said Overby.

The lack of big earnings reports or economic data on Monday sharpened investors’ focus on economic fears and interest rates, according to Melissa Brown, Global Head of Applied Research at Qontigo in New York.

“It’s a knife edge between whether we’re going to teeter into a recession or have a soft landing. Is the Fed acting appropriately?” said Brown who also noted that moves may be exaggerated as many investors take vacation around the end-of-year holidays.

“Investors have not necessarily changed their view in aggregate but those who have are driving the market right now and driving bigger changes in stock prices because of low trading volume,” she said.

According to preliminary data, the S&P 500 (.SPX) lost 35.20 points, or 0.91%, to end at 3,817.16 points, while the Nasdaq Composite (.IXIC) lost 156.66 points, or 1.46%, to 10,548.75. The Dow Jones Industrial Average (.DJI) fell 161.48 points, or 0.49%, to 32,758.98.

Big sector decliners included communications services (.SPLRCL), technology (.SPLRCT) and consumer discretionary (.SPLRCD) while energy (.SPNY) outperformed.

Market heavyweights such as Apple Inc (AAPL.O), Microsoft Corp (MSFT.O) and Inc (AMZN.O) created some of the biggest drags on the market.

Trading in Tesla Inc (TSLA.O) was volatile with the electric carmaker falling as much as 2.8% during the session following a Twitter poll that showed a majority of respondents want Tesla Chief Executive Elon Musk to step down as CEO of the social media platform.

Meta Platforms (META.O) shares fell after the European Commission said it could impose a fine of up to 10% of the tech conglomerate’s annual global turnover if evidence showed an infringement of the EU’s antitrust laws.

L3Harris Technologies Inc (LHX.N) lost ground after the U.S. defense contractor said it would buy hypersonic engine manufacturer Aerojet Rocketdyne Holdings Inc (AJRD.N) for $4.7 billion. Aerojet gained ground.

Shares of casino operators Melco Resorts & Entertainment, Las Vegas Sands Corp (LVS.N) and Wynn Resorts (WYNN.O) fell after Macau said on Friday that six casino firms will invest around $15 billion as part of new 10-year contracts they signed to operate in the world’s biggest gambling hub.

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A trader works on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 14, 2022. REUTERS/Andrew Kelly

A trader works on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 14, 2022. REUTERS/Andrew Kelly
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