Wall Street falls as S&P suffers biggest quarterly drop in two years

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, March 30, 2022. REUTERS/Brendan McDermid

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  • Consumer spending rose less than expected in February
  • Energy sector heads toward its best quarter ever
  • Walgreens Falls After Earnings

NEW YORK, March 31 (Reuters) – US stocks closed out the first quarter on a down note on Thursday with its biggest quarterly decline in two years concerns persisted about the continuing conflict in Ukraine and its inflationary effect on prices and the Federal Reserve’s response .

While optimism about a possible peace deal between Ukraine and helped lift Russia’s stocks earlier in week, hopes quickly evaded and Russia’s President Vladimir Putin threatened Europe on Thursday to halt its gas contracts unless they are paid in rubles as Ukraine prepared for more attacks. read more

The United States imposed new Russia-related sanctions, and US President Joe Biden launched the largest release ever from the country’s emergency oil reserve and challenged oil companies to drill more in a bid to lower gasoline prices that have soared during the war in Ukraine. read more

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Stock prices have been sensitive to any signs of progress toward a peace pact between Russia and Ukraine. Already-high US inflation has intensified with rising commodity prices such as oil and metals since the war began.

As prices increase, the Fed becomes increasingly likely to become more aggressive in raising interest rates to combat inflation, potentially curbing economic growth.

Data on Thursday showed consumer prices barely rose in February as pricing pressures intensified, while personal consumption expenditures (PCE) excluding food and energy rose by 0.4%, in line with expectations. read more

“The PCE number came out today, which is the Fed’s preferred number, and although that was right on target, it was higher than it was last month, and the sense is it is going to continue to go higher, therefore you are seeing some weakness,” said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.

“That only solidifies (Fed Chair) Jay Powell and the Fed’s position to be more aggressive so there are going to be multiple 50 basis point hikes.”

According to preliminary data, the S&P 500 (.SPX) lost 70.15 points, or 1.52%, to end at 4,532.30 points, while the Nasdaq Composite (.IXIC) lost 222.77 points, or 1.54%, to 14,219.50. The Dow Jones Industrial Average (.DJI) fell 535.80 points, or 1.52%, to 34,693.01.

While the S&P did suffer worst quarter since the COVID-19 pandemic was in full swing in the United States in 2020, stocks have rebounded somewhat in March, notching a gain of more than 4%.

Investors will look toward Friday’s jobs report for more confirmation of labor market strength and insight into the possible path of monetary policy by the US central bank.

Nearly all of the 11 major S&P sectors were lower, with financials (.SPSY) and communication services (.SPLRCL) among the weakest during the session.

Energy (.SPNY), easily the best performing sector so far this year with a gain of about 39%, slipped+ as oil prices dropped on Biden’s announcement while OPEC stuck to its existing output deal. The secured sector its biggest quarterly climb on record with the advance. read more

Drugstore chain Walgreens Boots Alliance (WBA.O) slumped after the company kept its 2022 forecast for low-single digit earnings growth unchanged. read more

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Reporting by Chuck Mikolajczak; edited by Jonathan Oatis

Our Standards: The Thomson Reuters Trust Principles.

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