June 20, 2022: -On Tuesday, the Dow Jones Industrial Average tumbled below the critical 30,000 level for the first period since January 2021 as investors worried the Federal Reserve’s aggressive approach toward curbing inflation would bring the thrift into a recession.
On Wednesday, Markets had rallied after the Fed declared its most significant rate hike since 1994 but reversed those gains and then some on Thursday.
The Dow dropped 2.42%, or 741.46 points, to 29,927.07, while the S&P 500 slipped 3.25% to 3,666.77. The Nasdaq Composite was sliding 4.08% to 10,646.10 and touched its lowest level since September 2020.
The major averages have complained of steep losses this week. The S&P 500 is down 6%, while the Nasdaq has fallen 6.1%. The blue-chip Dow is off by about 4.7% this week and on rate for its 11th losing week of the last 12.
The S&P 500 and Nasdaq Composite dropped distance into the bear market territory. Ending the session, they lost 24% and 34% from their all-time highs, respectively, as inflation and fears of slowing economic growth weigh on investors. The Dow, meanwhile, is 19% below its Jan. 5 all-time intraday high.
“Investor sentiment seems to be able to focus on one thing at a time,” said Susan Schmidt of Aviva Investors. “Yesterday, the Fed delivered as people expected. It was battling the consumer price index data much higher than expected and raised concerns about inflation being so aggressive. Investors are recognizing that the counter to this is slowing the economy.”
Thursday marked the first time the Dow sold below 30,000 since January 2021. The average advanced above that level in November 2020 when massive monetary and fiscal stimulus fueled a broader market rally led by tech shares and carried the important standards to then-record highs.
Breaking past the 30,000-mark put the Dow better than 60% above its pandemic closing low. While 30,000 isn’t necessarily a technical level for the Dow, these round 1,000-point verges are seen by many on Wall Street as vital psychological reports for the market.
Data out Thursday further offered a surprising slowdown in economic activity. Housing starts declined 14% in May, largely more severe than the 2.6% decline expected by economists surveyed by Dow Jones. The June Philadelphia Fed Business Index arrived with a negative 3.3 reading, its first contraction since May 2020.
Home Depot, Intel, Walgreens, JPMorgan, 3M, and American Express hit new 52-week lows between growing recession fears, while tech shares dropped after a bounce on Wednesday. Amazon, Apple, and Netflix all sank nearly 4%. Tesla and Nvidia dropped 8.5% and 5.6%, respectively.
All significant sectors declined on Thursday, led by consumer discretionary and energy, down about 5% each. Travel stocks took a leg lower on Thursday. United and Delta tumbled 8.2% and about 7.5%, respectively, while cruise yarn stocks Carnival, Norwegian Cruise Line, and Royal Caribbean lost nearly 11%. Merely four Dow stocks completed higher on the day.
Staples stocks, known for their steady cash shots that could hold up during recessions, dealt in a proper place or around the flatline. Procter & Gamble and Walmart stood a little more elevated.
