Stocks closed broadly lower on Wall Street Tuesday, after a discouraging snapshot of U.S. consumer confidence stoked investors’ worries about the risk that sharply higher interest rates and pervasive inflation could trigger a recession.
The S&P 500 ended 2% lower, reversing a 1.2% gain from earlier in the day. The Dow Jones Industrial Average fell 1.6% and the Nasdaq composite ended 3% lower.
Roughly 85% of the stocks in the benchmark S&P 500 closed in the red. Technology, communications and health care stocks accounted for a big share of the decline. Retailers and other companies that rely on direct consumer spending also helped pull the index lower. Energy stocks, the only sector in the index to notch gains this year, rose as crude oil prices headed higher.
Conference Board consumer confidence
The indexes got off to a solid start, but the gains faded by midday after the Conference Board reported that its consumer confidence index fell in June to its lowest level in more than a year. The decline was driven largely by concerns over inflation, including rising prices for gas and food. The results were also much weaker than economists expected. “Confidence is going to continue to shrink as long as inflation remains high,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “It all comes back to inflation, it’s ultimately driving reaction from the Fed and impacting the market and consumer confidence.” Investors face a pervasive list of concerns centering around rising inflation squeezing businesses and consumers. Supply chain problems that have been at the root of rising inflation were made worse over the last several months by increased restrictions in China related to COVID-19.
Businesses have been raising prices on everything from food to clothing. Russia’s invasion of Ukraine in February put even more pressure on consumers by raising energy prices and pumping gasoline prices to record highs. Consumers were already shifting spending from goods to services as the economy recovered from the pandemic’s impact, but the intensified pressure from inflation has prompted a sharper shift from discretionary items like electronics to necessities.
Rising inflation raises possibility of recession
Stubborn inflation pressures have driven a stark shift in policy from central banks, which are raising rates to try and temper inflation after years of holding rates down to help economic growth. Now, they are trying to slow economic growth, but investors are worried that they could go too far and actually push the economy into a recession as key economic indicators are already showing a slowdown in things like retail sales.
“The market might be getting spooked by the speed with which consumers are losing confidence, and that it could possibly upend a soft landing” for the economy, said Sam Stovall, chief investment strategist at CFRA.Stocks closed broadly lower on Wall Street Tuesday, after a discouraging snapshot of U.S. consumer confidence stoked investors’ worries about the risk that sharply higher interest rates and pervasive inflation could trigger a recession.
The S&P 500 ended 2% lower, reversing a 1.2% gain from earlier in the day. The Dow Jones Industrial Average fell 1.6% and the Nasdaq composite ended 3% lower.
Roughly 85% of the stocks in the benchmark S&P 500 closed in the red. Technology, communications and health care stocks accounted for a big share of the decline. Retailers and other companies that rely on direct consumer spending also helped pull the index lower. Energy stocks, the only sector in the index to notch gains this year, rose as crude oil prices headed higher.
Conference Board consumer confidence
The indexes got off to a solid start, but the gains faded by midday after the Conference Board reported that its consumer confidence index fell in June to its lowest level in more than a year. The decline was driven largely by concerns over inflation, including rising prices for gas and food. The results were also much weaker than economists expected. “Confidence is going to continue to shrink as long as inflation remains high,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “It all comes back to inflation, it’s ultimately driving reaction from the Fed and impacting the market and consumer confidence.” Investors face a pervasive list of concerns centering around rising inflation squeezing businesses and consumers. Supply chain problems that have been at the root of rising inflation were made worse over the last several months by increased restrictions in China related to COVID-19.
Businesses have been raising prices on everything from food to clothing. Russia’s invasion of Ukraine in February put even more pressure on consumers by raising energy prices and pumping gasoline prices to record highs. Consumers were already shifting spending from goods to services as the economy recovered from the pandemic’s impact, but the intensified pressure from inflation has prompted a sharper shift from discretionary items like electronics to necessities.
Rising inflation raises possibility of recession
Stubborn inflation pressures have driven a stark shift in policy from central banks, which are raising rates to try and temper inflation after years of holding rates down to help economic growth. Now, they are trying to slow economic growth, but investors are worried that they could go too far and actually push the economy into a recession as key economic indicators are already showing a slowdown in things like retail sales. “The market might be getting spooked by the speed with which consumers are losing confidence, and that it could possibly upend a soft landing” for the economy, said Sam Stovall, chief investment strategist at CFRA.
Stocks closed broadly lower on Wall Street Tuesday, after a discouraging snapshot of U.S. consumer confidence stoked investors’ worries about the risk that sharply higher interest rates and pervasive inflation could trigger a recession.
The S&P 500 ended 2% lower, reversing a 1.2% gain from earlier in the day. The Dow Jones Industrial Average fell 1.6% and the Nasdaq composite ended 3% lower.
Roughly 85% of the stocks in the benchmark S&P 500 closed in the red. Technology, communications and health care stocks accounted for a big share of the decline. Retailers and other companies that rely on direct consumer spending also helped pull the index lower. Energy stocks, the only sector in the index to notch gains this year, rose as crude oil prices headed higher.
Conference Board consumer confidence
The indexes got off to a solid start, but the gains faded by midday after the Conference Board reported that its consumer confidence index fell in June to its lowest level in more than a year. The decline was driven largely by concerns over inflation, including rising prices for gas and food. The results were also much weaker than economists expected. “Confidence is going to continue to shrink as long as inflation remains high,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “It all comes back to inflation, it’s ultimately driving reaction from the Fed and impacting the market and consumer confidence.” Investors face a pervasive list of concerns centering around rising inflation squeezing businesses and consumers. Supply chain problems that have been at the root of rising inflation were made worse over the last several months by increased restrictions in China related to COVID-19.
Businesses have been raising prices on everything from food to clothing. Russia’s invasion of Ukraine in February put even more pressure on consumers by raising energy prices and pumping gasoline prices to record highs. Consumers were already shifting spending from goods to services as the economy recovered from the pandemic’s impact, but the intensified pressure from inflation has prompted a sharper shift from discretionary items like electronics to necessities.
Rising inflation raises possibility of recession
Stubborn inflation pressures have driven a stark shift in policy from central banks, which are raising rates to try and temper inflation after years of holding rates down to help economic growth. Now, they are trying to slow economic growth, but investors are worried that they could go too far and actually push the economy into a recession as key economic indicators are already showing a slowdown in things like retail sales.
“The market might be getting spooked by the speed with which consumers are losing confidence, and that it could possibly upend a soft landing” for the economy, said Sam Stovall, chief investment strategist at CFRA.