The stock market is falling sharply for a third day in a row on concerns that 2023 could bring a global recession and that central banks will continue to aggressively raise rates. Facebook parent Meta Platforms (META) bucked the trend by gaining 3% on an upgrade.
The Nasdaq composite fell 1.4% while the S&P 500 dropped 1.5% by early afternoon. The Dow Jones Industrial Average fell 1.6%. The small-cap Russell 2000 index dropped 1.5%.
Volume fell on the Nasdaq but rose on the NYSE vs. the same time on Thursday. Friday is the quarterly stock market event with options and futures expiring, commonly referred to as “quadruple witching.” Market volume tends to be higher during those days.
On Friday, the S&P 500 followed the Nasdaq in breaching the 50-day moving average. The S&P is now at its lowest level since Nov. 9.
The yield on the benchmark 10-year Treasury note rose 3 basis points to 3.48%. Crude oil prices fell 2.7% to $74.04 per barrel.
All 11 S&P sectors are down Friday, led lower by the S&P Real Estate Select Sector ETF (XLRE), which was down 3.6% in early afternoon trading.
“Market volume increases during major expiration days, and that can usually move a nervous market in one direction or another,” said Quincy Krosby, chief global strategist for LPL Financial. “Market participants continue to wonder if the Santa Claus rally … is really going to take place. That the Senate passed a one-week funding bill to keep the government open until next Friday could also be the kind of net positive event that brings cheer to the market.”
Next week marks the start of Santa Rally seasonality for the stock market, peaking between Christmas and the first two trading days of 2023.
Stock Market Falls On Weak Business Activity
The flash composite Purchasing Manager’s Index (PMI) dropped sharply to 44.6, below November’s 46.4 number and well below Econoday’s consensus forecast of 46.7. The flash PMI combines both manufacturing and services into one index.
Adding to investors’ concerns about rate hikes and a global recession, the European Central Bank said Friday it would continue to raise rates in half-percentage-point increments next year. The Bank of England was the only major central bank this week to signal caution about raising rates much higher, saying it believed the U.K. economy was already in a recession.
Meta Rallies On Upgrade, Tesla Plunges
Meta Platforms rallied 2.9% after JPMorgan analyst Doug Anmuth raised the social media giant to overweight and raised the price target to 150.
The analyst took an upbeat view after a miserable year, noting that “heading into 2023, we believe some of these top and bottom-line pressures will ease, and most importantly, Meta is showing encouraging signs of increasing cost discipline.”
Tesla (TSLA) CEO Elon Musk banned high-profile and mostly liberal journalists from CNN, The New York Times and The Washington Post for publishing real-time coordinates on his airplane movements. TSLA stock sold off Friday, dropping more than 4%.
Stock Market Movers And Shakers
Accenture (ACN) on Friday reported fiscal first-quarter earnings and revenue that topped Wall Street targets. However, shares fell more than 6% after revenue guidance came in below expectations. Currency exchange rates impacted the company’s outlook.
U.S. Steel (X) rose 4.2% after raising Q4 EPS guidance above estimates. The stock is testing its 200-day line, which has been horizontal for months.
Follow Michael Molinski on Twitter @IMmolinski
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