Wall Street closes another week in the red

Weeks go by and turmoil in financial markets is intensifying as a growing number of investors fear ongoing Federal Reserve rate hikes will push the economy into a deep recession. Several Fed members said that inflation was unacceptably high and reiterated that the central bank would need to maintain higher interest rates to fight it.

Wall Street's main indexes suffered heavy losses for the third week in a row with the S&P 500 dropping 2.91% (-24.77% year-to-date) and posting its worst monthly skid since March 2020. The Nasdaq ended down 2.69% (-32.40% for the year) while the Dow shed 2.92% (-20.95% YTD). The CBOE Volatility Index (VIX) hit levels (31.62) not seen since mid-June, reflecting growing signs of market stress.

In Europe, the main indexes also closed lower. The MSCI EMU was down 0.99% (-24.00% for the year) and the FTSE fell 1.78% (-6.65% YTD). Asian markets fared worse. The Shanghai Composite slid 2.07% (-16.91% YTD) while Japan’s Nikkei plunged 4.48% (-9.91% YTD).

Energy sector under the spotlight

WTI crude oil prices gained 0.95% over the week, snapping a 4-week losing streak, in the wake of production cuts caused by Hurricane Ian. Energy was the only S&P sector in the green this week (+1.83%). Elsewhere, it was a sea of red. Very few sectors such as materials (-0.73%) and health care (-1.38%) managed to outperform the broad market.

By contrast, utilities ended sharply lower (-8.81%, worst performer over the week). Information technology was another drag (-4.19%) on the broader market, weighed down by Apple stocks which took a nosedive (-8.13%) after Bank of America downgraded the tech giant, citing worries about a slowdown in consumer spending.

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