Wall Street ends for third day as growth concerns weigh on tech

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  • Tech stocks fall after Fed’s latest rate move
  • Investors worried about recession fears
  • Darden Restaurants quarterly sales decline
  • JetBlue posts lowest level since March 2020
  • Index Down: Dow 0.35%, S&P 0.84%, Nasdaq 1.37%

Sep 22 (Reuters) – Major Wall Street indices fell lower on Thursday, falling for a third straight session as investors reacted to the Federal Reserve’s latest aggressive move to rein in inflation by selling growth stocks, including technology companies.

The Fed raised rates on Wednesday by an estimated 75 basis points and indicated a longer trajectory for policy rates than market prices, fueling fears of further volatility in stock and bond trading in a year already It has seen bear markets in both asset classes. read more

The US central bank’s projections for economic growth released on Wednesday were also attractive, with just 0.2% growth this year, rising to 1.2% for 2023.

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The shocks were already in the market after several companies — recently FedEx Corp and Ford Motor Company (FN) — issued tough outlook for earnings.

As of Friday, the S&P 500 estimated earnings growth for the third quarter is 5%, according to Refinitiv data. Excluding the energy sector, the growth rate is -1.7%.

The S&P 500’s forward price-to-earnings ratio, a common metric for a stock’s valuation, stands at 16.8 times earnings — well below the stock’s nearly 22 times forward P/E at the beginning of the year.

Forward PE for the index has declined but is still above the long-term average

Nine of the 11 major S&P sectors fell, with consumer discretionary (.SPLRCD) and financial (.SPSY) stocks falling 2.2% and 1.7%, respectively.

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Shares of megacap technology and growth companies such as Amazon.com Inc (AMZN.O), Tesla Inc (TSLA.O) and Nvidia Corp (NVDA.O) were up 1% to 5.3% as the benchmark US Treasury yield took an 11- hit. fell in the middle. year high.

Rising returns are particularly weighted by valuations of companies in the technology sector that have high future earnings expectations and are a significant part of a market-cap-weighted index such as the S&P 500.

The S&P 500 tech sector (.SPLRCT) is down 28% so far this year, compared to a 21.2% drop in the benchmark index.

Mike Mulaney, director of global markets in Boston, said, “If we have stable inflation, and if (Fed Chair Jerome) Powell sticks to his guns, I think we’re going to enter a recession and we’ll lose earnings. Let’s see a significant drop on expectations.” partner.

“If that happens, I have high confidence in those conditions that we break 3,636,” he said, referring to the S&P 500’s mid-June low, the weakest point of the year.

The Dow Jones Industrial Average (.DJI) fell 107.1 points, or 0.35%, to 30,076.68, the S&P 500 (.SPX) fell 31.94 points, or 0.84%, to 3,757.99, and the Nasdaq Composite (.IXIC) fell 153.39 points, or 1.37%, from up to 11,066.81.

Major US airlines – which have enjoyed a rebound amid increased travel as pandemic restrictions eased – also down, with United Airlines (UAL.O) and American Airlines (AAL.O) down 4.6% and 3.9% respectively. Were. It lost up to 11% for United and 10.6% for American over the past three days.

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JetBlue Airways Corp (JBLU.O), plunging 7.1% and posting a third consecutive loss, closed at its lowest level since March 2020.

Darden Restaurants Inc. (DRI.N) slipped 4.4% after Olive Garden’s parent reported declining first-quarter sales.

Volume on US exchanges stood at 11.39 billion shares, compared to an average of 10.91 billion for the full session over the past 20 trading days.

The S&P 500 posted a new 52-week high and a new 123 low; The Nasdaq Composite posted 18 new highs and 699 new lows.

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Reporting by Shruti Shankar, Medha Singh, Devik Jain and Ankika Biswas in Bengaluru and David French in New York; Editing by Shaunak Dasgupta, Anil D’Silva and Deepa Babington

Our Standards: Thomson Reuters Trust Principles.

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