Wall Street falls to two-month low amid recession fears

NEW YORK – US stocks closed in the red on Friday, falling to a two-month low. That’s as FedEx warned of an impending global economic slowdown and investors rushed to flight to safety at the end of his tumultuous week.

The S&P 500 has broken below 3,900, below the notable support level.

After finishing a week rattled by inflation fears, impending rate hikes and ominous economic warning signs, the S&P 500 and Nasdaq suffered their worst weekly percentage plunges since June.

“It’s been a tough week. It feels like Halloween came early,” said David Carter, managing director of JP Morgan in New York.

“We are facing a toxic environment of high inflation, high interest rates and low growth, which is not good for stock and bond markets,” he said.

Risk-off sentiment has gone from simmering to boiling as global demand showed signs of slowing after FedEx Corp withdrew its earnings forecast late Thursday.

FedEx’s move followed statements from the World Bank and IMF warning of an impending global economic slowdown.

A deluge of mixed economic data dominated by better-than-expected inflation reports (CPI) has confirmed a rate hike of at least 75 basis points at the end of next week’s Fed’s monetary policy meeting.

“The market expects Fed rates to rise significantly next week, but there is great uncertainty and concern about future rate hikes,” Carter added.

“The Fed is doing what it should, and after some pain, the markets and economy will recover on their own.”

Financial markets have priced in an 18% chance that the Fed fund’s target rate could rise by as much as 100 basis points on Wednesday, according to the CME’s FedWatch tool.

The Dow Jones Industrial Average fell 139.4 points (0.45%) to 30,822.42, the S&P 500 fell 28.02 points (0.72%) to 3,873.33, and the Nasdaq Composite fell 103.95 points (0.9%) to 11,448.40.

Nine of the S&P 500’s 11 major sectors closed in negative territory, with energy and industrials recording the steepest losses.

Dow Transport, seen as a barometer of economic health, plummeted 5.1%.

The drop was led by a 21.4% drop in FedEx shares, making it the biggest drop in the S&P 500.