US stocks experienced a broad sell-off in Thursday, with Apple leading the slide, as recession fears returned, and Wall Street wiped out the gains from a brief rally the previous day.
The S&P 500 dropped 2.1%, hitting a new 2022 low, as the Dow Jones Industrial Average lost over 450 points to drop 1.5%. The Nasdaq lost 2.8%.
Tech stocks led the way down, as heavily-weighed Apple lost 5% on concerns about waning demand for its new iPhone 14, and investors heard Bank of America downgraded the stock. Analysts in a note said that BoA’s research team felt the demand trajectory would worse as time went on. In another reveal, Bloomberg reported that one of the most senior executives at the tech giant would be leaving the company over a viral TikTok video in which he made an off-color joke.
Meta Platforms announced it would be reducing headcount and reorganizing its teams. It would be the first downsizing in the company’s history. Management reportedly told staff that the, “macroeconomy remains tough and volatile.” Shares were down 3.7%.
CarMax fell 25%, after a disappointing earnings report which showed the car-market’s second quarter earnings missed estimates due to “affordability challenges: which weighed down sales.
Bed Bath & Beyond dropped 4% after posting a bigger quarterly loss than expected, due to inventory snafus and inflationary pressures.
Jobless claims declined to 193,000, hitting the lowest level since April, in the week ending September 24th. It was down from a downwardly revised 213,000 the previous week. Consensus estimates assembled by Bloomberg had predicted there would be 215,000 claims.
The fears of recession continue to rattle the market. In a note, EY Parthenon Chief Economist Gregory Daco said that “the absence of proper policy coordination along with the speed and synchronization of rate hikes” is risking an “excessive and disorderly tightening of financial conditions.”
Daco continued, “In the UK, the economic outlook has recently taken a turn for the worse with the release of Prime Minister Liz Truss’ budget leading to a market rout, with treasury yields surging to their highest since 2010 and the British pound plunging to its lowest level in 37 years.”
After the Bank of England purchased roughly 65 billion pounds, or roughly $69 million, of long-dated UK government bonds, 30-year British bond yields dropped 100 basis points, bringing them down from a two-decade high.
Atlanta Fed President Raphael Bostic said the move by the Bank of England did not worry him or change his views on US Federal Reserve Policy.
Bostic said, “I would expect growth to be below trend, we would start to see demand for a wider range of products start to soften, and we would start to see labor markets start to be more rationalized.”
