Wall Street gyrated wildly on Thursday, the S&P 500 once again narrowly avoiding correction confirmation at the end of a session marked by a rally, selloff and recovery as investors juggled positive economic news with mixed corporate earnings, geopolitical unrest and the prospect of a more hawkish US Federal Reserve.
The Dow Jones Industrial Average fell 7.31 points, or 0.02 percent, to close at 34,160.78. The S&P 500 lost 23.42 points, or 0.54 percent, to end the session at 4,326.51 and the tech-heavy Nasdaq Composite Index dropped 189.34 points, or 1.4 percent, to 13,352.78.
All three major United States stock indexes have been whipsawed by uncertainty in recent days, marked by wide fluctuations and heightened volatility.
Small-caps have had a rougher go of it, with the Russell 2000 now more than 20 percent below its November 8 record high, officially confirming the index has been in a bear market since then.
“This is a market that is schizophrenic,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “There are those who believe everything negative has been discounted and there are others who believe that the worst is yet to come.”
“It’s a period of a lot of uncertainty; it’s been this way all month,” Ghriskey added.
Among a spate of economic data released on Thursday, the US Department of Commerce’s advance take on fourth-quarter gross domestic product shows the US economy in 2021 grew at its fastest pace in nearly four decades.
Markets seesawed following the release on Wednesday of a statement from the Fed Reserve’s Federal Open Market Committee, which left key interest rates near zero, and Fed Chairman Jerome Powell’s subsequent Q&A session during which he appeared to raise the possibility of more rate hikes this year than previously expected, beginning in March.
The fed funds futures market now prices in nearly five rate hikes this year in the wake of Powell’s remarks.
Geopolitical tensions simmered, as Russia continues to build up troops along the Ukrainian border and diplomats scramble to avoid conflict in the region.
Fourth-quarter reporting season has hit full stride, with 145 of the companies in the S&P 500 having reported. Of those, 79 percent have delivered consensus-beating results, according to Refinitiv data.
Analysts now see, on aggregate, year-on-year fourth-quarter earnings growth of 24.2 percent for the S&P 500, per Refinitiv.
“The numbers and especially the guidance has not been that inspiring and that’s a factor that’s been limiting the upside so far this week,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
Supply-chain challenges, the engine driving inflation through the recovery from the global health crisis, have been a recurring theme this earnings season.
Intel Corp cited that issue as the reason behind its disappointing first-quarter earnings forecast, which sent its shares tumbling.
Intel’s dismal outlook weighed on the broader sector, sending the Philadelphia SE semiconductor index sharply lower.
Shares of Tesla Inc dropped after the company warned that supply issues will last throughout 2022. Shares of rivals Lucid Group and Rivian Automotive also ended sharply lower.
Netflix Inc jumped following news that billionaire investor William Ackman has amassed a new $1bn stake in the company.
Apple Inc results were expected after the market close.