US markets remain under the cosh as S&P 500 closes at two year low

4:10 p.m .: S&P 500 closes at two-year low, Nasdaq a bright spot

US markets endured another difficult session as comments from Federal Reserve policymakers showed appetite for further rate hikes had not abated, while the strengthening dollar also raised concerns about corporate earnings.

At the close, the Dow Jones Industrial Average was down 124 points, or 0.42%, to 29,137, and the S&P 500 was down 7.7 points, or 0.21%, to 3,647, although the Nasdaq Composite bucked the trend and fell 27 points, or 0 .25% to 10,830.

On Tuesday, St. Louis Fed President James Bullard made the case for more rate hikes, while Chicago Fed President Charles Evans said the central bank needs to raise rates by at least one more percentage point this year.

The S&P 500 posted its lowest close in two years and is now about 24% below its record high at the Jan. 3 close.

12:05 p.m.: Dow oscillates between gains and losses

The two major US indices have rebounded from five days of losses after the Dow Jones and S&P 500 closed at their lowest levels in two years.

At midday, the S&P 500 was flat at 3,653, while the Nasdaq Composite was up 0.3% at 10,837. The Dow Jones hit a high of 29,659 before leveling off at 29,216 by the noon bell.

Keith Buchanan, senior portfolio manager at Globalt Investments, said analysts are debating whether the market is beginning to bottom.

“Participants in my view are starting to pick, if you will, from the carnage of the past few weeks, trying to identify the point at which markets have been washed out or are maximally bearish to get more involved,” Buchanan wrote in a report .

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Among the biggest gainers were cruise lines Norwegian, Royal Caribbean and Carnival, up 4.8%, 4.5% and 3.9%, respectively, after it was announced that Canada will lift COVID-19 travel restrictions in October.

US fertilizer maker CF Holdings rose 6.4%, while solar company Enphase Energy rose 4.6% and chipmaker Nvidia rose 2.2%.

On the other hand, Keurig fell Dr. Pepper was down 2.1% after Goldman Sachs (NYSE:GS) downgraded the stock to neutral from a “buy” rating, and Estee Lauder fell nearly 3% despite yesterday’s announcement of a partnership with BALMAIN Focus Luxury beauty products.

9:35 am: Market sentiment is improving… for now

U.S. stocks turned around sharply at Tuesday’s open as bargain hunters swooped in after days of sell-offs, with the S&P 500 falling to a fresh closing low for 2022 and the Dow Jones Industrial Average along with the S&P 500 and Nasdaq Composite officially entering a bear market occurred yesterday.

Shortly after the market opened, the Dow Jones Industrial Average was up 207 points, or 0.7%, to 29,468 points, the S&P 500 was up 40 points, or 1.1%, to 3,695 points, and the Nasdaq Composite was up 173 points, or 1.6%, to 10,975 Points .

Meme stock AMC Entertainment Holdings (NYSE:AMC) Inc rose 6% after announcing it had entered into a distribution agreement to sell up to 425 million shares of AMC Preferred Units, known as “APEs.” APE also rose 10%.

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After gaining about 3% in premarket trading, shares of Twitter Inc (NYSE:TWTR) remained open as the legal battle between the social media company and eccentric billionaire Elon Musk heats up, with lawyers from both parties claiming several Debates will result in unresolved pre-trial requests for information.

Forex.com market analyst Fiona Cincotta noted that while stocks were trending higher, it was more of a pause in the market’s sell-off than the start of anything more positive.

“The fundamentals remain the same and a recession is becoming increasingly likely,” she said. “With companies like Goldman Sachs (NYSE:GS) downgrading global equities to underweight for more than three months, we can expect the final quarter of the year to be a shock.”

6:30 a.m.: A breather?

US stocks are expected to open higher after five consecutive days of sharp declines amid growing concerns over a faltering global economy fueled by high inflation, rising interest rates and volatility in currency markets.

Futures for the Dow Jones Industrial Average were up 0.5% in premarket trading, while those for the S&P 500 were up 0.7% and contracts for the Nasdaq-100 were up 0.9%.

The stock futures gains come after the Dow entered what it calls a bear market, broadly defined as levels about 20% below recent highs, and the S&P 500 index plummeted to its lowest level in about two years.

The trigger for the market crisis last week was the Federal Reserve’s third 75 basis point rate hike and expectations of more rate hikes in the future, but the turmoil in the FX market, with the pound heading towards parity with the dollar, has the equity weighs on market problems.

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“We had a bearish start to the week on Monday and price action across multiple asset classes remains volatile and chaotic – and that’s particularly true in FX markets, which have been rocked by sterling’s freefall,” said Ipek Ozkardeskaya, senior analyst at the Swissquote Bank.

The pound has come under huge selling pressure since the UK’s ‘mini-budget’ announcement last week, fueling debt worries rather than boosting growth expectations as hoped. The UK central bank’s decision not to go ahead with an emergency rate hike has prompted further selling, pushing the pound to new all-time lows just above the $1.03 mark.

Ozkardeskaya noted that investors are sitting on cash after selling assets, citing reports that $4.6 trillion is now in US money market funds paying 2% or more.

“But of course the rising state yields are also becoming attractive. The US 2-year is now yielding about 4.30%, while the S&P500 dividend yield is only about 1.7%,” she added.

It remains to be seen where the flows will go, but this morning’s stock futures contracts suggest that recent price declines could attract bargain hunters.

On the data front, US Durable Goods Orders and Home Selling Prices are due today, and Personal Consumption Spending numbers are due Friday. Each of these numbers will shed some light on how the world’s largest economy is faring given the prevailing concerns.

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