US Stock Rout Worsens

Wall Street's main indexes closed well down on Friday, as rattled investors continued repositioning themselves to reflect fears the US Federal Reserve's hawkish rate policy to curb inflation will push the American economy into recession.

The Dow tumbled 1.6 percent to 29,590, its lowest closing value since November 2020. The S&P 500 fell 1.7 percent to 3,693, and the Nasdaq sank 1.8 percent to 10,867.

All three indexes suffered heavy weekly declines. The Nasdaq dropped 5.03 – its second straight week of falling by more than five percent – while the S&P was down 4.77 percent and the Dow 4 percent lower.

After enjoying hefty gains for last two years, Wall Street has been rocked in 2022 by worries about a host of issues including the Ukraine conflict, the energy crisis in Europe, Covid-19 flare ups in China, and tightening financial conditions across the globe.

A half dozen central banks, including in the United States, Britain, Sweden, Switzerland and Norway, delivered rate hikes this week to fight inflation, but it was the Fed's signal that it expects high US rates to last through 2023 that caught markets off guard.

Dire outlooks from a handful of companies have also added to woes in a seasonally weak period for markets. Having withdrawn its earnings forecast last week, FedEx outlined cost cuts of up to $2.7 billion on Thursday after falling demand hammered first-quarter profits. The delivery giant's stock slumped 3.4 percent to its lowest close since June 30, 2020.

All the 11 major S&P sectors declined, led by a 6.8 percent slide in energy shares. Oil and gas-related stocks were pummeled by the decline in crude prices, which fell in response to concerns about demand in a recessionary environment and the strong US dollar.

Rate-sensitive technology and growth stocks dropped. Alphabet, Apple, Amazon, Microsoft and Tesla all fell between 1.3 percent and 4.6 percent. (Reuters)