The malaise on Wall Street continued Tuesday, sending the stock market on its longest losing streak since February 2020, even as trading in global markets began to calm down after days of turmoil in everything from currencies even oil prices.
Trade was volatile. After an early gain, the S&P 500 reversed course and closed down 0.2 percent for the day, its sixth consecutive daily decline and a new low for the year. The last time the S&P 500 posted a drop for as many days was in February 2020, when investors were shaken at the start of the coronavirus pandemic.
The S&P 500 has fallen 6.5 percent in the past six trading days. Market sentiment has turned sharply since a summer rally lifted the index 17 percent from a June low, as investors have grappled with the idea that central banks around the world will not rein in their campaign. to raise interest rates to fight inflation, even if that threatens the economy.
The hard line from central bankers, who are trying to rein in price increases that are occurring at their fastest pace in decades, has analysts predicting that a recession is more likely for the United States, Britain and continental Europe.
“It seems very clear now that the major central banks are not going to blink to reduce inflation at the cost of growth,” said Rob Subbaraman, head of global macroeconomics research at Nomura. “I am more concerned about Europe than the United States in terms of the depth of the recession.”
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- Enduring Meme Stocks: The frenzy that saw traders congregate on social media and drive up the share prices of companies like GameStop can no longer be explained simply as a pandemic phenomenon.
Several central banks, including the Federal Reserve and the Bank of England, raised rates last week, with further hikes in reserve.
On Tuesday, Charles Evans, president of the Federal Reserve Bank of Chicago, said in a speech that “we’re going to have to raise rates higher and then hold that position for a while” to control inflation.
Stock trading in Europe and Asia was more stable than in recent days, but some major benchmarks finished slightly lower. The pan-European Stoxx 600 Index fell 0.13 percent, while in Asia, Japan’s Nikkei rose 0.5 percent and South Korea’s Kospi Composite Index gained 0.1 percent.
The Shanghai Composite Index rose more than 1 percent. Reuters reported that Chinese market regulators had asked brokers to help stabilize domestic stock markets ahead of a major Communist Party congress next month.
In Britain, the center of financial turmoil in recent days, the FTSE 100 fell about half a percentage point, while sterling rose to $1,072, a day after hitting a low point against the dollar. Investors have been unnerved by the government’s announcement on Friday of a sweeping plan to cut taxes and increase borrowing.
Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said on Monday that the market’s severe reaction to the British government’s proposals reflects fears that “the new actions will add uncertainty to the economy.”
In the United States, “the key question is going to be what does this mean to ultimately weaken the European economy, which is an important consideration for the performance of the US economy,” Bostic said in an interview on Monday. a washington post event.
Asked if the instability emanating from Britain increased the possibility of a global recession, Bostic said: “I don’t think it helps.”
Oil prices recovered some of the lost ground on Tuesday, with the price of West Texas Intermediate crude, the US benchmark, rising 2.3 percent to about $78.50 a barrel. The gains came when some oil producers in the Gulf of Mexico, including Chevron Y PAsaid it would evacuate some oil rig personnel as Hurricane Ian moved toward Florida.
On Friday, oil prices had fallen below $80 a barrel for the first time since January.
Joanna Smialek Y joe renison contributed report.