Wall Street ends sharply lower with Nasdaq confirming correction

The tech-heavy Nasdaq Composite Index ended the trading day on Wednesday down 10.7 percent from its November 19 closing record high.

A specialist trader works inside a booth on the floor of the New York Stock Exchange
Stocks have gotten off to a rocky start in 2022, as a fast rise in United States Treasury yields amid concerns the US Federal Reserve will become aggressive in controlling inflation has particularly hit tech and growth shares [File: Brendan McDermid/Reuters]

Wall Street’s main indexes ended sharply lower on Wednesday, with the tech-heavy Nasdaq Composite confirming it was in a correction, after a diverse set of corporate earnings and as investors continued to worry about higher United States Treasury yields and the US Federal Reserve tightening monetary policy.

The Nasdaq ended down 10.7 percent from its November 19 closing record high, as stocks sold off into the market close. A correction is confirmed when an index closes 10 percent or more below its record closing level.

The Nasdaq’s last correction was in early 2021, when the tech-heavy index fell more than 10 percent from February 12 to March 8.

On Wednesday, Apple shares fell 2.1 percent, weighing most on the Nasdaq, while declines in Tesla and Amazon also dragged on the index.

Stocks have gotten off to a rocky start in 2022, as a fast rise in US Treasury yields amid concerns the Fed will become aggressive in controlling inflation has particularly hit tech and growth shares. The benchmark S&P 500 is down about 5 percent so far this year.

“Any beginning of tightening often results in significant volatility and I think there is always that risk that there is a policy error and it ends the economic cycle,” said Kristina Hooper, chief global market strategist at Invesco. “So we just have a lot of apprehension.”

The Dow Jones Industrial Average fell 339.82 points, or 0.96 percent, to 35,028.65, the S&P 500 lost 44.35 points, or 0.97 percent, to 4,532.76 and the Nasdaq Composite dropped 166.64 points, or 1.15 percent, to 14,340.26.

Consumer discretionary fell most among S&P 500 sectors, dropping 1.8 percent, while financials dropped about 1.7 percent and technology slid 1.4 percent.

The small-cap Russell 2000 fell 1.6 percent.

Stocks had tumbled on Tuesday, with the Nasdaq falling 2.6 percent, after weak results from Goldman Sachs and a spike in Treasury yields. US Treasury yields eased on Wednesday from two-year highs.

Investors are looking to next week’s Fed policy meeting for more clarity on central bankers’ plans to rein in inflation. Data last week showed US consumer prices increased solidly in December, culminating in the largest annual rise in inflation in nearly four decades.

“We have had a bit of a selloff here and that has been predicated on this concern around the Fed and interest rates,” said Keith Lerner, co-chief investment officer at Truist Advisory Services.

In company news, shares of Procter & Gamble rose 3.4 percent after the consumer goods company bumped up its annual sales forecast.

Bank of America Corp reported a better-than-expected 30 percent jump in quarterly profit, while Morgan Stanley also reported fourth-quarter profit that beat market expectations, following uneven results from other banks. Bank of America shares rose 0.4 percent, while Morgan Stanley shares gained 1.8 percent.

Declining issues outnumbered advancing ones on the New York Stock Exchange by a 2.06-to-1 ratio; on Nasdaq, a 2.09-to-1 ratio favoured decliners.

The S&P 500 posted 13 new 52-week highs and seven new lows; the Nasdaq Composite recorded 23 new highs and 630 new lows.

About 11.4 billion shares changed hands in US exchanges, compared with the 10 billion daily average over the last 20 sessions.

Source: Reuters