The stock market is down after Tuesday’s big rally as recession fears escalate and Federal Reserve Chairman Jerome Powell prepares to speak before Congress.
Dow Jones Industrial Average
futures fell 332 points, or 1.1%, while
futures fell 1.3% and
futures fell 1.4%. This comes after the indices gained more than 2% on Tuesday.
“Equity futures are down sharply… as much of yesterday’s rally is rendered amid resurgent growth concerns ahead of Powell’s testimony today,” writes Tom Essaye, founder of Sevens ReportResearch.
Powell will testify before the Senate Banking Committee just at the opening bell this morning. It should provide some insight into Fed policy and the state of the economy, two things the markets are concerned about. Inflation has remained high, leading to slower economic growth – and the Fed needs to keep raising interest rates to fight rising prices. Markets are aware that Powell will likely sound pessimistic about the economy and should reiterate that the Fed is sticking to its inflation-fighting policy.
Adding to the angst, former Federal Reserve Bank of New York economist Bill Dudley wrote in a Bloomberg article that the Fed is likely to have pushed the US economy into recession.
And it’s not just the stock market that continues to reflect the growing risk of a recession.
The price of oil is down, with WTI crude falling more than 4% to $104 a barrel. This is down from the multi-month high of $122 hit earlier this month. Copper is down more than 3% at $3.91 a pound and is down from a multi-month high of $4.55 also hit in early June.
In line with expectations of weaker demand – and lower prices – the 10-year Treasury yield is down 3.2% from a close of 3.3% on Tuesday, while investors buy the bond. This is not a surprise as the Fed is actively trying to reduce inflation and the yield has already more than doubled this year.
Overall, “this morning’s market action has recession worries written all over it,” writes Peter Boockvar, chief investment officer of Bleakley Advisory Group.
Here are some moving actions on Wednesday:
(ticker: TSLA) fell 2% in premarket trading after rising 9.4% on Tuesday. Elon Musk, chief executive of the electric vehicle maker, said job cuts at
would result in a reduction of up to 3.5% of the company’s total workforce.
(AAPL) fell 1.8% early Wednesday, and
(MSFT) fell 1.7%. Shares of tech giants have risen for two straight sessions.
(ticker: LZB) shares rose 8.8% in premarket trading after the furniture maker reported fiscal fourth-quarter earnings that beat Wall Street estimates.
(CHK) fell 3.1% even after its buyback program authorization was doubled to $2 billion.
Write to Joe Woelfel at [email protected]