On Friday, the S&P 500 closed its books on its steepest September decline in two decades, skidding across the finish line of a tumultuous quarter tumultuous with historically hot inflation, rising interest rates, and recession fears.
The S&P and the Dow posted their third consecutive week of declines, and all three indexes posted their second straight month-on-month losses, as inflation and recessionary fears continued to loom over the US economy. All three major indexes ended sharply lower, having reversed a brief rally early in the session. The Dow lost 1.7 per cent, and the S&P 500 and Nasdaq both lost a percent and a half.
Federal Reserve Chair Jerome Powell has rattled markets with an increasingly aggressive stand on high inflation similar to that of former Fed Chair Paul Volcker who tamed inflation in the early 1980s by tightening monetary policy.
George Ball, chairman of Sanders Morris Harris, said things could turn around for stocks as soon as November.
I was a manager at the Prudential Insurance Company when Paul Volcker was on the board. Paul told me that the way to kill inflation was like killing a snake. You had to kill the snake and then show it to everyone prominently so that they understood the snake was dead. That is what the Fed is doing now. They are showing the head of the dead snake to investors, to the public at large. Markets look ahead by generally six to nine months and by mid-November, that is probably a timing inflection point where I think stocks could become attractive again, rather than being pulled down by negative sentiment on a day-to- day trend basis. As for the individual movers, shares of cruise operator Carnival plunged more than 23 per cent, while Nike, the world's largest sportswear company, dropped by nearly 13 per cent after both cited inflation-related margin pressures.
Apple, Microsoft, and Amazon were among the stocks that were weighing the heaviest on the S&P, with the iPhone maker losing 3 per cent.