Stocks Fail to Recover From Last Week’s Drop…..

U.S. stocks added to last week’s losses as the markets remained skittish amid the backdrop of a flood of tightened monetary policies, which is fostering recessionary concerns. Treasury yields soared, and the U.S. dollar remained in rally mode, notching fresh multi-decade highs. Crude oil prices turned lower, and gold saw pressure. In light equity news, shares of Unilever were slightly lower after the company announced that its CEO will retire, while casino operators rallied after Macau continued to lift travel restrictions. The economic week began slowly with a disappointing read on Dallas’ manufacturing activity, which unexpectedly moved further into contraction territory. Asia finished broadly lower, and Europe ended the day mixed as continued tightening of financial conditions exacerbated global uneasiness.

The Dow Jones Industrial Average decreased 330 points (1.1%) to 29,261, the S&P 500 Index went down 38 points (1.0%) to 3,655, and the Nasdaq Composite finished 65 points lower (0.6%) to 10,803. In moderate volume, 4.8 billion shares of NYSE-listed stocks were traded, and 4.6 billion shares changed hands on the Nasdaq. WTI crude oil lost $2.03 to $76.71 per barrel. Elsewhere, the gold spot price declined $22.40 to $1,633.20 per ounce, and the Dollar Index rallied 0.8% to 113.99.

The S&P 500 Index has fallen for two-straight weeks, with the Dow dropping below its June lows, while the S&P 500 and Nasdaq are threatening those levels. Inflation pressures have persisted, forcing the Fed to aggressively tighten monetary policy.

The Dallas Fed Manufacturing Index unexpectedly moved further into contraction territory (a reading below zero) for September. The index fell to -17.2 from -12.9 in August, and compared to the Bloomberg consensus estimate calling for an improvement to -9.0. The Index surprisingly deteriorated as the contraction for new orders increased, more than offsetting accelerated growth in production and shipments. Employment dipped but remained comfortably in expansion territory, and inflation pressures remained severely elevated, with prices paid accelerating, but did moderate in terms of prices received.

Treasury yields were higher, as the yield on the 2-year note climbed 11 basis points (bps) to 4.32%, the yield on the 10-year note soared 20 bps to 3.89%, and the 30-year bond rate rallied 11 bps to 3.72%.

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