Stocks Continue To Fall On Growing Concerns
2:38 pm Friday, December 16th, 2022
It has been another disappointing session thus far for the stock market on this quadruple witching options expiration day. The same recession fears that precipitated yesterday’s selling continue to plague investors today, along with a deteriorating technical position.
Market participants also received some discouraging economic data this morning that piled onto existing concerns. The preliminary December IHS Markit Manufacturing PMI (46.2 vs 47.7 prior) and Services PMI (44.4 vs 46.2 prior) both fell deeper into contraction territory (i.e. sub-50 readings).
The broad based retreat saw the S&P 500 breach support at its 50-day moving average (3,864) shortly after the open. At its current level the S&P 500 sits approximately 5.5% below the level it was trading at when the FOMC decision was released on Wednesday.
All 11 S&P 500 sectors trade in the red with losses ranging from 0.6% (communication services) to 3.5% (real estate). Ten sectors show a loss of at least 1.2%. In turn, all 30 Dow components are lower.
The communication services sector trades with a slimmer loss than the broader market thanks to an outsized gain in Meta Platforms (META) after it was upgraded to Overweight from Neutral at JPMorgan.
The main sticking point for stock market participants is that the Fed thinks continued rate hikes are appropriate to curb inflation while the economic backdrop is weakening. So, investors remain hesitant to pay a premium for 2023 earnings that are likely going to be subject to downward revisions.
The resulting buyers’ strike has declining issues leading advancing issues by a greater than 4-to-1 margin at the NYSE and a nearly 3-to-1 margin at the Nasdaq.
The Treasury market trades in mixed fashion. The 2-yr note yield is down five basis points to 4.20% and the 10-yr note yield is up three basis points to 3.48%
