S&P 500 Down 3% and Nasdaq Drops 4% On Fed Worries

Barry Adams
16 Jun, 2022
New York City

Stocks on Wall Street plunged led by large declines in tech stocks on rising pessimism about the economic outlook. 

The losses on Wall Street reverberated around the world and indexes in Europe fell more than 2% and Asian markets have been on the slide after the U.S. rate hike. 

The S&P 500 declined 3.3% to 3,666.78 and the Nasdaq Composite fell 4.1% to 10,646.10. 

Investors are skeptical that the Fed will be able to engineer a soft landing as the gap between long term interest rates and inflation remains very large. 

Inflation is running above 8% and the yield on 10-year Treasury notes closed at 3.205% today. 

Airlines were under pressure after the latest run up in oil prices are expected to trim thin operating margins. 

American Airlines declined 8.6% to $12.16, Delta Air dropped 7.6% to $29.53, and United Airlines Holdings fell 8.1% to $34.84. 

Travel stocks were also under pressure in today's market selloff. 

Hilton Hotels declined 4.9% to $115.92, Hyatt Hotel Corporation fell 5.4% to $77.46, and Las Vegas Sands Corp dropped 4.9% to $31.06. 

The leading tech stocks led the decliners. 

Apple Inc fell 3.97% to $130.06, Amazon dropped 3.71% to $103.66, Microsoft decreased 2.7% to $244.97, and Alphabet Inc declined 3.4% to 2,132.72. 

3M, American Express, Home Depot, Intel, JPMorgan, and Walgreens dropped to their 52-week lows. 

Carnival Corp dropped 11.1% to $8.75, Royal Caribbean Cruises Ltd fell 11.3% to $35.17, and Norwegian Cruise Line declined 11.4% to $10.38. 

Futures of crude oil prices rose $1.97 to $117.27 and natural gas declined 3 cents to $7.37 a unit. 

Natural gas prices continued to rise in Europe after Russia throttled the supply for the third time in two months. 

Russia controlled Gazprom said it will slash flow of natural gas via Nord Stream 1 pipeline by 60% and blamed Siemens for not returning the compressor sent for maintenance. 

Siemens said it was "impossible" to return compressors from its Canadian maintenance facility because of sanctions Canada had placed on doing business with Russia. 

Gazprom also reported technical difficulties at Portovaya pump station near St Petersburg, Russia and said that the regulator had halted processing of gas at the location. 

On June 14, Gazprom halted gas flow to 100 million cubic meters per day from 167 cmpd through Nord Stream 1 pipeline and Italy-based Eni also reported today that natural supplies have been cut by 15% without any explanation. 

Gas buyers in Bulgaria, Denmark, Finland, Germany, Holland, Netherlands, Poland also lost access to supplies after customers refused to open  ruble account with Gazprom as required by the latest decree from the Kremlin. 

Natural gas futures surged in trading today 20% before settling near $118 per mega watt hour and extended jump nearly 50% since the beginning of the week.

The DAX index declined 3.0% to 13,038.49, the CAC-40 index plunged 2.4% to 5,886.27, and the FTSE 100 index dropped 3.1% to 7,044.98.

The Bank of England lifted rates by 25 basis points to 1.25%, fifth consecutive rate increase in a row. 

The pound dropped 0.5% to $1.235 after the rate decision and rebounded from the earlier losses of 0.8%. 

The Bank of England also lifted its inflation outlook to "slightly above 11%" by October on rising energy prices. 

The U.K. economy unexpectedly declined 0.3% in April after falling 0.1% in March, the Office of National Statistics had reported a week ago. 

The back-to-back monthly economic growth declines were last seen in March and April 2020. 

The Swiss National Bank lifted its key benchmark rate by 50 basis points from -0.75% to -0.25%, the first rate increase since 2007. 

The SNB also said it is prepared to act in foreign exchange market and defend the Swiss franc if necessary.