US stocks fall at midday for the third consecutive session

12:05 p.m .: Wall Street avoids risk

U.S. indices were firmly in the red by midday as losses in tech stocks, including a 27% decline this year for the S&P 500 tech sector, fostered a sense of risk aversion among investors.

By noon, the Dow Jones Industrial Average was down 120 points at 30,063, the S&P 500 was down 30 points at 3,761, while the Nasdaq Composite was down 145 points at 11,075.

Michael Hewson, chief market analyst at CMC Markets UK, said after the sharp falls seen yesterday, US markets continued their softer theme.

“The big market story on Wednesday was undoubtedly the Federal Reserve’s decision to raise interest rates by 75 basis points. Although widely expected and in fact not as aggressive as some had suggested, it still caused some volatility,” Hewson wrote in a note.

“The tech-heavy U.S. index NASDAQ is an example of this, dropping 200 points immediately after the news before rising nearly 300 points and then ending the day at a session low. ‘one day on the index at 54.12% vs. 29.39% on the month,’ Hewson wrote.

Hewson also noted that Robinhood Markets and Virtu Financial posted gains after the U.S. Securities and Exchange Commission said it would halt before allowing the order flow payment ban, which is a main source of income for both.

“Apple shares are also lagging on reports that it is cutting iPhone 14 production due to weak demand and focusing its attention on the iPhone 14 Pro where demand appears to be holding up better,” wrote Hewson.

Among the main drivers were pharmaceutical companies Eli Lilly and Merck, up 3.7% and 3%, respectively. Valero Energy Inc (NYSE:VLO) rose 3.8% and Royal Caribbean reversed yesterday’s fall, as it rose 2.8%.

On the downside, Factset Research fell 8.5% due to missed Q4 earnings information, while Lucid Group fell 7%, Caesars Entertainment fell 6.4% and Airbnb (NASDAQ: ABNB) fell 6%.

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9:45 am: Wall Street reacts to unemployment claims in the United States

Major US indices opened mixed as traders reacted to layoffs in the US labor market.

At the start of trading, the Dow Jones Industrial Average was up 0.09% at 30,206, the S&P 500 was down 0.03% at 3,787, while the Nasdaq Composite was down 0.17 % to 11,200.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said initial claims rose to 213,000 for the week ending September 17, from a lower-revised 208,000 but below consensus of 217,000.

“We expected a sharp increase in claims this week, on the grounds that last week’s unexpected drop to 213K was a pre-Labor Day distortion. The mere 5,000 increase in today’s report is not definitive proof that the claims trend has fallen further, but we are now very much looking forward to next week’s report. Four consecutive draws below 220,000 would be pretty compelling,” Shepherdson wrote in a note.

Shepherdson noted that the US Federal Reserve is using the strength of the US labor market as a reason to raise interest rates, including its three most recent hikes of 75 basis points.

“For a Fed looking for signs of a weaker labor market, the recent numbers won’t be comforting, though they say nothing about the pace of gross hiring; claims are just one indicator of the pace of gross layoffs,” he said, adding that payroll is the difference between the two.

“It is possible that the bar for layoffs will remain very low even as companies gradually reduce their hiring plans, but the Fed has made it clear that it wants a significantly more flexible labor market, and we are not sure that the demand for labor has slowed enough to bring this about without at least some increase in layoffs,” Shepherdson said.

6:30 a.m.: More caution anticipated

US stocks are set to open flat or lower on Thursday after the Federal Reserve, as expected, announced a 75 basis point (bp) interest rate hike yesterday and signaled that further hikes are likely.

Futures on the Dow Jones Industrial Average rose 0.1% in premarket trading, while those on the S&P 500 lost 0.1% and contracts on the Nasdaq-100 fell 0.2% .

“’Ugly’ is a good word to describe the mood of the market this morning. The sell-off is likely to continue,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, noting that Wednesday’s falls are expected to deepen.

Stocks initially followed the widely expected decision by the Fed to make its third consecutive 75 basis point interest rate hike, but the hawkish tone of Fed Chairman Jerome Powell at the conference press that followed, sent shares plummeting.

“We need to put inflation behind us. I wish there was a painless way to do this. There isn’t,” Powell said. His words were a stark reminder that more interest rate hikes are looming.

It remains to be seen whether the Fed can steer the world’s largest economy into a so-called soft landing, but for now Powell’s remarks underscore that rate setters are focused on fighting the tide. inflation which remains stubbornly around its highest level for 40 years.

Ozkardeskaya noted that pricing officials’ projections far exceeded market expectations. “Most of them are in favor of sending rates above 4.25% by the end of the year; this means that there must be at least another 75 basis point hike on the pipeline.

“Then, if we’re lucky, we could end the year with a 50 basis point hike, which could be followed by a few 25 basis point hikes before the Fed stops and takes a break. “, she added.

Elsewhere, Russia’s renewed resolve in its war against Ukraine spooked markets and reduced risk appetite. Russian President Vladimir Putin has declared partial mobilization and the country is preparing to mobilize 300,000 reservists.

“This is a major escalation in the war, because so far the Russians have deployed around 150-200,000 troops. So sending 300,000 more men is a big deal,” Ozkardeskaya said. “Putin’s announcement, which fell like a bombshell on investors already stressed by the Fed’s decision, yesterday sent capital into safe-haven assets.”

Some of these outflows are expected to continue today as central banks around the world move to raise interest rates amid mounting price pressures.

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