[New York Stock Market] Decline on Profit Slowdown Concerns... Retracing Half of Gains Since June

[Photo by AP Yonhap News]

[Asia Economy Reporter Byunghee Park] The New York stock market closed lower on the 6th (local time) as trading resumed after the Labor Day holiday.

The S&P 500 index fell for the second consecutive day as Morgan Stanley downgraded corporate earnings forecasts and caution ahead of the Beige Book release on the 7th weighed on the market. The New York stock market recorded its sixth decline in the last seven trading days, retracing about half of the gains made since mid-June.

The Dow Jones Industrial Average closed at 31,145.30, down 173.14 points (-0.55%) from the previous trading day. The S&P 500 index fell 16.07 points (-0.41%) to 3,908.19, and the Nasdaq Composite dropped 85.96 points (-0.74%) to 11,544.91.

Concerns over economic slowdown continued to weigh on the New York stock market.

On the day, Mike Wilson, Morgan Stanley’s investment strategist, lowered the earnings per share (EPS) forecast for the S&P 500 index citing economic slowdown. Wilson had initially expected the S&P 500 EPS to reach $225 this year and increase to $236 next year. However, he lowered this year’s forecast to $220 and predicted a further 3% decline to $212 next year. While denying a recession, he anticipated a drop in EPS next year.

Amid concerns about economic slowdown, the 10-year Treasury yield surged 0.15 percentage points to 3.34% compared to the previous trading day. The 2-year Treasury yield also rose 0.10 percentage points to 3.50%.

Despite the economic slowdown, expectations that the Federal Reserve (Fed) will decide on a giant step (a 0.75 percentage point increase in the benchmark interest rate) at this month’s Federal Open Market Committee (FOMC) meeting to stabilize inflation also weighed on stock prices. The August employment data released just before the Labor Day holiday met Wall Street expectations, reinforcing the possibility of a giant step.

The Institute for Supply Management (ISM) released the August Services Purchasing Managers’ Index (PMI) on the day, which exceeded Wall Street expectations and extended the expansion phase to 27 months. The August PMI recorded 56.9, surpassing the economist forecast of 55.5 compiled by The Wall Street Journal.

The Beige Book, which serves as a reference for economic assessment at the FOMC, is scheduled to be released on the 7th, raising investors’ caution.

Concerns about a European economic recession grew as Russia cut off gas supplies, and worries about China’s economic slowdown increased as Chengdu, the capital of Sichuan Province, extended COVID-19 lockdown measures until the 7th. These factors heightened global economic slowdown concerns, burdening the New York stock market.

Among the top market capitalization stocks, Apple’s stock price fell 0.82%, while Tesla rose 1.56%, showing mixed results.

Bed Bath & Beyond’s stock plunged 18.42% following news of the sudden death of its Chief Financial Officer (CFO).

FedEx’s stock price dropped 2.18% after Citi downgraded its investment rating.

This content was produced with the assistance of AI translation services.