US stocks ended sharply lower on Friday, tumbling to two-month lows as a warning of impending global slowdown from FedEx hastened investors' flight to safety at the conclusion of a tumultuous week.
All three major US stock indexes slid to levels not touched since mid-July, with the S&P 500 closing below 3,900, a closely watched support level.
Staggering past the finish line of a week rattled by inflation concerns, looming interest rate hikes and ominous economic warning signs, the S&P 500 suffered its worst weekly percentage plunge since June.
The Nasdaq is set for its biggest Friday-to-Friday drop since January while October 2020 was the last time the blue-chip Dow suffered a steeper weekly drop.
"It’s been a tough week. It feels Halloween came early" said David Carter, managing director at JPMorgan in New York. "We are facing in this toxic brew of high inflation, high interest rates and low growth, which isn’t good for stock or bond markets."
Risk-off sentiment went from simmer to boil in the wake of FedEx Corp's withdrawal of its earnings forecast late Thursday, citing signs of dampening global demand.
FedEx's move followed remarks from the World Bank and the IMF, both of which warned of an impending worldwide economic slowdown.
A deluge of mixed economic data, dominated by a hotter-than-expected inflation report (CPI), cemented an interest rate hike of at least 75 basis points at the conclusion of the Fed's monetary policy meeting next week.
"While the market is expecting a big bump in the Fed’s rates next week, there is tremendous uncertainty and concern about future rate increases," Carter added. "The Fed is doing what it needs to do. And after some pain, markets and the economy will heal themselves."
Financial markets have priced in a 14 percent likelihood of a super-sized, 100 basis point increase to the Fed funds target rate on Wednesday, according to CME's FedWatch tool..
The Dow Jones Industrial Average fell 139.4 points, or 0.45 percent, to 30,822.42, the S&P 500 lost 28.02 points, or 0.72 percent, to 3,873.33 and the Nasdaq Composite dropped 103.95 points, or 0.9 percent, to 11,448.40.
Dow Transports, viewed as a barometer of economic health, plummeted over 5 percent, its drop led by swooning FedEx stock.
Peers United Parcel Service and XPO Logistics also fell, as did e-commerce giant Amazon.com.
The session also marked the monthly options expiry, which occurs on the third Friday of every month. Options-hedging activity has amplified market moves this year, contributing to heightened volatility. (Reuters)