Dow Set to Slump, Apple and Microsoft Fall — and What Else Is Happening in the Stock Market Today
People walk along Wall Street, near the New York Stock Exchange in New York.
Photo by ED JONES/AFP via Getty Images
The stock market is dropping after Tuesday’s big rally as recession fears ramp up and Federal Reserve chairman Jerome Powell prepares to speak before Congress.
Dow Jones Industrial Average futures have fallen 332 points, or 1.1%, while S&P 500 futures have dropped 1.3% and Nasdaq Composite futures have declined 1.4%. This comes after the indexes gained more than 2% Tuesday.
“Stock futures are sharply lower… as much of yesterday’s rally is being given back amid a resurgence in growth concerns ahead of Powell’s testimony today,” writes Tom Essaye, founder of Sevens Report Research.
Powell will testify before the Senate Banking Committee just around the time of the opening bell this morning. He is expected to give a review of Fed policy and the state of the economy, two items that markets have been concerned about. Inflation has remained elevated, causing economic growth to slow down — and the Fed needs to keep raising interest rates to combat rising prices. Markets are aware that Powell is likely to sound pessimistic about the economy and should reiterate that the Fed is sticking to its inflation-fighting policy.
Adding to the angst, economist former president of Federal Reserve Bank of New York Bill Dudley wrote in a Bloomberg piece that the Fed is likely to have put the U.S. economy into recession.
And it isn’t just the stock market that continues to reflect the rising chance of a recession.
The price of oil is down, with WTI Crude falling more than 4% to $104 a barrel. It’s down from a multi-month peak of $122 hit early this month. Copper is down more than 3% to $3.91 per pound and is down from a multi-month high of $4.55 also hit in early June.
Consistent with the expectation of weakening demand — and falling prices — the 10-year Treasury yield is down to 3.2% from a 3.3% close Tuesday, as investors buy up the bond. That isn’t a surprise as the Fed is actively trying to lower inflation and the yield had already risen by more than twofold this year.
Overall, “this morning’s market action has recession worries written all over it,” writes Peter Boockvar, chief investment officer of Bleakley Advisory Group.
Here are some stocks on the move Wednesday:
Tesla (ticker: TSLA) fell 2% in premarket trading after rising 9.4% on Tuesday. Elon Musk, chief executive of the electric-vehicle maker, said job cuts at Tesla would result in a reduction of as much as 3.5% of the company’s total headcount.
Apple (AAPL) fell 1.8% early Wednesday, and Microsoft (MSFT) declined 1.7%. Shares of the tech giants have risen for two straight sessions.
La-Z-Boy (ticker: LZB) shares rose 8.8% in premarket trading after the furniture maker posted fiscal fourth-quarter earnings that topped Wall Street estimates.
Chesapeake Energy (CHK) fell 3.1% even after its repurchase program authorization was doubled to $2 billion.
Write to Joe Woelfel at [email protected]
