By Yasin Ebrahim
Investing.com -- The S&P 500 moved off session lows Tuesday, but remained under pressure as investors upped their bearish bets on stocks on fears that the Federal Reserve may signal that aggressive rate hikes will likely continue.
The S&P 500 fell 1.2%, the Dow Jones Industrial Average slipped 1%, or 311 points, and the Nasdaq was down 0.9%.
The Fed kicked off its two-day meeting on Tuesday, and many expect that a decision to raise rates 0.75% will likely be announced and followed up with guidance that will show the central bank’s willingness to persist with the front-loading of rate hikes to combat inflation.
The Fed’s willingness to keep on tightening monetary policy has returned focus toward the growing threat of an economic recession, or hard landing.
“Clearly the risk is stacked towards exacerbating the slowdown into a hard landing. That is by far the bigger risk at the moment, and it increases with every rate raise into this slowing growth environment,” Will Rhind, founder and CEO, GraniteShares told Investing.com in an interview on Tuesday.
The bond market, meanwhile, continued to signal the risk of a larger recession as ongoing inversion in a key part of the Treasury Yield curve deepened to levels not seen in more than a month.
The 2-year treasury yield over 10-year Treasury yield inverted to near 50-basis points. The deeper inversion in the yield curve pressured banking stocks, with Synchrony Financial (NYSE:SYF), State Street Corp (NYSE:STT), U.S. Bancorp (NYSE:USB) down more than 2%.
Consumer discretionary stocks were one of the biggest drags on the broader market, weighed down by a 10% rout in Ford Motor Company (NYSE:F) and a more than 5% slump in General Motors (NYSE:GM).
Ford warned on performance following a $1 billion hit in the third quarter from rising supplier costs.
“Ford preannounced 3Q results, calling for Ebit adjusted ranging from $1.4 billion to $1.7 billion, considerably below ingoing consensus of $2.98 billion and our estimate of $2.93 billion,” Deutsche Bank said in a note..
Tech, however, was one of the relative outperforming sectors on the day, down just 0.6%, as Apple added to gains from a day earlier.
Apple (NASDAQ:AAPL) rose more than 1% after TF International Securities analyst Ming-Chi Kuo said that the higher-margin iPhone 14 Pro models are attracting increasing demand that could help boost iPhone revenue and average selling price.
Begin trading today! Create an account by completing our form
At One Financial Markets we are committed to safeguarding your privacy.
Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.
Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.
Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.
By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.