It was an ugly day for stocks as the major market indexes extended yesterday's Fed-induced slump into a second straight day.
Today's selling was sparked by the latest batch of economic data, which exacerbated recession fears across Wall Street. Retail sales and manufacturing data released early Thursday showed that the Federal Reserve's aggressive campaign of interest rate hikes are indeed cooling both the U.S. economy and inflation. And yet Fed Chair Jerome Powell warned Wednesday that rates could stay higher for longer until tightness in the labor market starts to ease.
One economic data point that didn't come to pass today was any sign of cooling in the jobs market. Indeed, the Labor Department said earlier that weekly jobless claims fell by 20,000 last week to a seasonally adjusted 211,000.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Progress on slowing the economy was seen elsewhere, however, with data from the Commerce Department showing that retail sales fell 0.6% month-over-month in November – the weakest reading since December 2021. Additionally, data from the Fed showed manufacturing activity in both New York state and the Philadelphia region declined by more than expected.
"The labor market might not be breaking but it is becoming clear the consumer is weakening and manufacturing activity is in a recession," says Edward Moya, senior market strategist at currency data provider OANDA. "Labor market weakness will be more noticeable next year and that should help reduce some of the constant wage pressures we are still seeing."
Today's selling was widespread, with the rate-sensitive communication services (-3.9%) and technology (-3.7%) sectors bearing the brunt of the losses. As for the major indexes, the tech-heavy Nasdaq Composite slumped 3.2% to 10,810, the broader S&P 500 Index fell 2.5% to 3,895, and the blue-chip Dow Jones Industrial Average dropped 2.3% to 33,202. It was the largest one-day drop for all three indexes since September.
Is Growth Poised for a Comeback?
We're close to the end of what has been a truly unforgiving year for investors. After all, the S&P 500 is on track for its worst annual loss since 2008. Should investors expect more of the same in 2023? It depends on whom you ask.
Wells Fargo analysts Chris Harvey and Michael Turrin expect 2023 to be "a back-and-forth year." Yes, they anticipate "double-digit sell-offs driven by the Fed and economic concerns," but, "ultimately, we see equities ending higher as the inflation fever breaks, the economy enters a malaise (not a sharp recession) and interest rates plateau." The duo add that the environment is supportive of growth, particularly at the mid-cap level, which is where they believe investors can find the best growth stocks.
Although there are plenty of opportunities to be found in growth-oriented investments, investors who want to spread the risk around may want to consider these best growth ETFs for 2023. The names featured here offer broad exposure to higher-risk, higher-reward stocks across a range of strategies.
-
Markets Are Quiet Ahead of Fed Day: Stock Market TodayInvestors, traders and speculators appear to be on hold amid an unusually fraught Fed meeting.
-
Quiz: Test Your Knowledge of the OBBB, Wealth Transfer and Early RetirementQuiz The financial professionals who contribute to Kiplinger's Adviser Intel recently wrote about the OBBB's impact on retirement, how to ensure your wealth passes to your family and early retirement questions.
-
Markets Are Quiet Ahead of Fed Day: Stock Market Today
Investors, traders and speculators appear to be on hold amid an unusually fraught Fed meeting.
-
Stocks Rise to Start Fed Week: Stock Market TodayThe Nasdaq Composite and S&P 500 hit new record closing highs as Wall Street awaits the Fed's next rate cut.
-
S&P 500 Slips Ahead of Fed Week: Stock Market TodayAll eyes are on the Federal Reserve ahead of next week's critical policy meeting.
-
September Fed Meeting: Live Updates and CommentaryThe September Fed meeting is a key economic event, with Wall Street keyed into what Fed Chair Powell & Co. will do about interest rates.
-
Dow Gains 617 Points as Rate Cuts Near: Stock Market TodayWednesday's economic data didn't shift Wall Street's expectations that the Fed is preparing for a rate cut at next week's meeting.
-
Hot August CPI Report Doesn't Shift the Rate-Cut Needle: What the Experts SayThe August CPI came in higher than forecast on a monthly basis, but Wall Street still expects a rate cut at next week's Fed meeting.
-
S&P 500 Hits New High After Oracle Earnings: Stock Market TodayAnother down day for Apple held the Dow Jones Industrial Average back, though.
-
Stocks Grind Up to New All-Time Highs: Stock Market TodayUnitedHealth stock led the Dow Jones Industrial Average amid increasing signs the labor market has not been well for months.
