S&P 500 Closes Down 1% After Volatile Session, Oil Wipes Off 2022 Gains

Barry Adams
26 Sep, 2022
New York City

Stocks on Wall Street lacked direction in early trading and accelerated decline after two hours of trading. 

Benchmark indexes dropped near the low of the session by 2:00 p.m. ET and after two failed rebound attempts sank in the final five minutes of trading.  

The S&P 500 index declined 1.03% to 3,655.04 and the Nasdaq Composite index dropped 0.6% to 10,802.90.  

On the first day of trading this week, after a week of more than 4% losses, investors shifted focus to the rising U.S. dollar, adding to the list of worries. 

Crude oil accelerated in the fifth week, after dropping in the four previous weeks in a row, erased gains of 2022. 

Crude oil fell $2.01 to $77.72 a barrel and natural gas rose 8 cents to $6.91 a thermal unit. 

Coal edged down $435.20 a ton, up 140.4% in the year so far. 

Crude oil dropped 20.5% in the month so far and up only 1.46% in 2022 after erasing this year's gains.  

The yield on 2-year notes edged up to a new 14-year high of 4.32%, 10-year notes inched higher to 3.90% and 30-year bonds advanced to 3.72%. 

 

Stock Movers 

AMC Entertainment plunged 10.4% to $7.16 on the news that the movie theater chain operator is likely to sell 425 million units of its preferred shares. 

Macy's Inc declined 3.3% to $15.19 and the retailer said the company plans to add 41,000 staff for the upcoming holiday season. The current hiring plan is consistent with the previous years, said the apparel retailer. 

Last week, Target announced its plan to add as many as 100,000 seasonal staff in stores and supply chain facilities. 

Retailer also said it plans to start its holiday sales as early as October 6 and continue till Dec 24, the longest holiday sale period. 

Target Corporation declined 2.7% to $148.46. 

Casino companies operating in China traded higher after Macau government said Mainland tour operators from China can resume casino visits from November 1. 

Wynn Resorts, Limited jumped 12.7% to $67.24 and Las Vegas Sands Corp jumped 12.4% to $39.90. 

China-based electric vehicle makers jumped after the government extended tax breaks for purchases. 

Li Auto Inc jumped 6.4% to $26.59, Nio Inc added 1.0% to $17.82 and Xpeng Inc increased 5.6% to $14.48. 

 

European Markets Lack Direction 

Benchmark indexes in Europe lacked direction in early trading but traded marginally higher. 

The DAX Index edged down 0.5% to 12,227.92, the CAC-40 index decreased 0.3% to 5769.39 and the FTSE 100 index was inched up 0.03% at 7.020.95. 

The euro inched lower to 96.176 cents on the ongoing worries of high inflation and rate path and the British pound dropped to a new 4-decade low of $1.069 on the worries that the recently announced tax cuts may increase government deficit. 

The yield on European bonds rose and Italian bod yields rose the most after the far-right party led coalition was ahead in the election. 

Giorgia Meloni led Brothers of Italy and coalition partners are set to win a majority of seats in the Senate and form a government. 

Italian bond yields rose to 4.52%, the highest since 2013 and spread with the German government bond yield widened to 235 basis points, approaching the record high of 250 basis points in 2020. 

Meloni campaigned on a promise to renegotiate the terms of payments received from the European Union that could jeopardize or delay as much as 200 billion euros from Brussels.  

The yield on the U.K. bonds rose to 4.25% from 3.15% last week and the German bund inched up to 2.09% and French bonds to 2.69%. 

 

China Adjusts Rates, Allows Gradual Depreciation

The People's Bank of China set the renminbi rate below 7.00 for the first time since July 2020 and let the currency slide below the psychologically important range between 6.0 and 7.0. 

The currency declined more after the central bank set the rate at 7.0298 but the tightly controlled currency dropped to 7.16, the level not seen since May 2008.   

Most Chinese exporters are keeping the export revenues in foreign bank accounts and taking advantage of the rising rates in the U.S. and Europe and not converting to renminbi as rates are falling in China. 

 

Asian Markets Drop 

In Asia, popular averages declined following the Friday's losses in the U.S. and Europe. 

The Nikkei index dropped 2.6% to 26,475.33, the Shanghai Composite index declined 1.2% to 3,051.41, the Sensex index plunged 1.6% to 57,145.32. 

The dollar continued its advanced against all major currencies in Asia. 

The yen dropped to a new 25-year low 144.23, the yuan eased to 7.14 and the Indian rupee eased to a new low of 81.43.