Stocks Turned Lower On Recession Worries

Barry Adams
22 Jun, 2022
New York City

Stocks turned lower after rallying in the previous session and investors refocused on rising inflation and elevated energy prices. 

Fears of an economic recession weighed on investor sentiment after the Fed Chairman Jerome Powell reaffirmed central banks commitment in fighting inflation. 

"We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so. 

We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses," Powell told Congress on Wednesday. 

Though the Fed expressed its strong commitment to fight inflation, prices have been rising at a faster pace for more than a year. 

The consumer price index has been rising at more than the Fed's target rate of 2% for the last seventeen months in a row. 

The S&P 500 rose 0.9% to 3,731.83 and the Nasdaq Composite fell 0.7% to 10,985.52. 

Futures of crude oil fell 6.2% to $107.51 a barrel and natural gas fell 10 cents to $6.70 a unit. 

On Wednesday, President Joe Biden is expected to ask Congress to drop federal gasoline and diesel taxes for three months. 

Weaker oil prices dragged down stocks in the energy complex. 

Chevron and Marathon Oil dropped more than 5%, Exxon Mobil declined 4%. Schlumberger NV fell 6%. 

After the market closes today, KB Home, Worthington Industries, and Steelcase are scheduled to release earnings. 

 

European Markets Accelerate Declines 

 

European markets accelerated declines after the U.K. inflation surged more than expected. 

Consumer price index rose 9.1% in May from 9.0% in April, according to the latest data from the Office for National Statistics.

Month to month price increase slowed to 0.7% from 2.5% in April, the report stated. 

The DAX index fell 2.0% to 13,027.62, the CAC-40 index declined 1.8% to 5,859.51, and the FTSE 100 index dropped 1.5% to 7,045.08.

Oil companies traded lower after crude oil prices declined 6% in the region. 

BP Plc fell 3.6%, Shell Plc decreased 3.6%, and Repsol S.A. declined 4.8%. 

BASF SE declined 5.6% to 43.30 euros after the chemical company said business in the second-half is likely to face considerable downturn. 

 

Asian Markets Turn Lower 

 

Markets in Asia closed lower following weak commodities prices and European markets. 

Crude oil prices in Asia declined 4% and natural gas prices dropped between 2% and 3% on the global recession worries. 

The Nikkei index in Tokyo declined 0.4% to 26,149.55 and indexes in Hong Kong dropped 2.6% to 21,008.34 and in Shanghai fell 1.2% to 3,267.20. 

The Sensex index lost 709.54 or 1.4% to 51,822.53 and the Nifty 50 index dropped 225.50 or 1.44% to 15,413.30.