Thursday, September 29, 2022

U.S. stocks sink again as rising interest rates and profit worries punish equities

Stocks fell Friday, sending the Dow Jones industrial average and S&P 500 to their worst monthly losses in more than a year, after two straight days of heavy selling spread through equities and commodities.

The loss for the Dow could extend this month to three in a row, marking the longest such losing streak since April last year, a period when the market briefly braced for a recession. Friday’s drop wiped out a chunk of gains over the past two years.

“The market hasn’t quit,” said Quincy Krosby, chief market strategist for Prudential Financial. “The attitude is ‘the glass is still half full’ for the retail investor, but at the margin the market is nervous.”

The S&P 500, down 0.6 percent on the day, has fallen 5.4 percent for the month, a brutal toll for stocks that had rallied after the U.S. elections and the election of a new government in 2018. The declines have been driven by the rise in interest rates and an erosion in the S&P 500’s valuation, but with higher earnings.

“The market is worried about profit margins,” Krosby said. “It’s a squeeze on margins and rising interest rates. You see a lot of the best-in-class businesses are having problems.”

The S&P 500 has now lost 2.5 percent since February 1.

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