Stocks fall to start busy week of earnings, inflation data

US stocks extended their slide on Monday Wall Street heads into third-quarter earnings season and attached to a volume of inflation statements.

The tech-heavy Nasdaq Composite (^IXIC) fell 1.2%, the lowest in two years, as the Biden administration set new restrictions on China’s access to U.S. technology. Chip sent stocks tanking And weigh in on the broader tech industry. S&P 500 (^ GSPCfell 0.9% and the Dow Jones Industrial Average (^ DJI) reduced by 150 points or 0.5%.

Declines extended in the afternoon as investors weighed comments from JP Morgan (JPM) notes CEO Jamie Dimon The US economy is likely to enter a recession In six to nine months. Dimon told CNBC at a conference in London that inflation, Russia’s war in Ukraine and the impact of Federal Reserve interest rate hikes create a “very serious” combination that could cause an economic downturn, and Europe is already in recession. .

Tech stocks took the brunt of Monday’s selloff as chip stocks fell. Measures imposed by the United States to block China’s access to semiconductors are aimed at undermining the country’s technological and military advances, but are a further blow to an industry already struggling with weak revenues as demand for computers, smartphones and other electronic devices declines. Shares of major chipmakers, including Nvidia (NVDA) and AMD (AMD) declined by approximately 4% and 2% respectively.

CBOE Volatility Index (^VIX), which measures short-term expectations of market volatility, has increased over 33 levels. And Treasury yields extended their recent climb. Oil retreated after rising 17% last weekBig jump since Russia invaded Ukraine.

The moves come after an erratic week that began with a sharp rally Ended with a sharp sale It wiped out most of the gains. The recent decline was fueled by a stimulus Strong September jobs report That’s what Federal Reserve officials have assured investors No shift away from tight monetary policy Very soon.

The benchmark S&P 500 index was down 23.6% year-to-date through Friday’s close, but nine single trading days have combined for a 32-point decline, according to DataTrek Research’s Nicholas Coles.

A large share of lower days occurred on events related to the Consumer Price Index (CPI) or the Federal Reserve, one triggered by Russia-Ukraine tensions, and two by poor corporate earnings releases, he added. All those factors are expected to test the US stock market in the coming week.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, USA on October 7, 2022. REUTERS/Brendan McDermid

With JP Morgan’s results, investors are bracing for a flurry of bank earnings that mark the start of a new earnings reporting period (JPM), City (C), Wells Fargo (WFC), and Morgan Stanley (Mrs) will all exit. Other companies, including PepsiCo, are due to report this week.PEP) and Delta Air Lines (DAL)

Researchers A A painful earnings season Steady inflation, high interest rates and geopolitical headwinds weigh on companies’ bottom lines.

“The bear market will not end until the deteriorating fundamental picture is more fully discounted,” Morgan Stanley chief equity strategist Mike Wilson said in a note.

On Wall Street’s plate September consumer price data, one of the most important statements ahead of the FOMC’s next policy-making meeting in November. While headline reading is again expected to moderate, all eyes will be on the “core” portion of the report, which will clear out the volatile food and energy categories. Economists polled by the Bloomberg Project Center CPI rose to 6.5% from 6.3% for the year, according to the latest estimates.

“Volatility in equity and fixed income markets will continue until there is a clear signal that inflation is under control,” Peter Essell, head of portfolio management at Commonwealth Financial Network, said in a recent note.

Alexandra Semenova is a Yahoo Finance reporter. Follow her on Twitter @alexandraandnyc

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