S&P 500 falls to new low as Fed fears swirl

S&P 500 falls to new low as Fed fears swirl

On Thursday, the S&P 500 fell to a new low as fears that a recession won't stop the Federal ReserveFederal Reserve from raising interest rates were swirled by the stock market's 2022 sell-off, sending the S&P 500 to a new low for the year.

The sell-off was broad-based and led by Apple, which tumbled as a major investment bank downgraded the one-time bear market outperformer. The stock was down 4.9%.

The S&P 500 declined 2.1% to 3,640. The closing low for the year is 47. It fell to a new intraday low of 3,610 during the session. This is its lowest intraday level since 2020.

The Dow Jones Industrial Average fell 458.13 points, or 1.54%, to 29,225. The tech-heavy Nasdaq Composite fell 2.84%.

The Bank of England said it would purchase bonds in an effort to keep pace with the financial markets and the cratering British pound as a result of the broad rally for stocks on Wednesday. In recent days, the pound has hit a new low against the U.S. dollar.

The Dow moved more than 500 points, or 1.9%, on Wednesday, while the S&P 500 rose nearly 2%, both snapping six-day losing streaks.

In a Thursday note from UBS Mark Haefele, we remain skeptical that the calmer mood in markets on Wednesday marks the end of the recent period of elevated volatility or risk-off sentiment. For a more sustained rally, investors will need to see convincing evidence that inflation is coming under control, allowing central banks to become less hawkish. The 10-year U.S. Treasury yield rebounded to a new all time high of 3.7%. A day prior to that, it posted its biggest one-day drop since 2020, after briefly surpassing 4%.

A stronger than expected jobless claims report didn't help sentiment. The idea that the Fed will keep raising rates to fight inflation without concern that it could hurt the labor market was built on the assumption that it will be hurt to the labor market.

Cleveland Federal ReserveFederal Reserve President Loretta Mester said on Thursday that interest rates are not yet restrictive, but there is more to be done to bring down inflation.

The major averages are on pace for a losing week and a month of sharp declines. The Nasdaq Composite leads the month's losses by 9.1%, while the Dow and S&P are on pace to end September roughly 7.3% and 7.9% lower, respectively.