The stock market ends an ugly quarter with another choppy day

Stocks were turbulent Friday, heading for a loss for the third quarter of the year, the first time the S&P 500 index has suffered three consecutive quarters of losses since the aftermath of the global financial crisis more than a decade ago.

The S&P 500 swung between gains and losses, moves that came after the government released another Inflation is higher than expected reading. The Fed is raising interest rates quickly as it tries to cool the pace of rate hikes, but persistent inflation increases the risk that it will need to raise interest rates further and end up doing a lot of damage to the economy.

The S&P 500 is on track for its third consecutive weekly decline and third consecutive quarterly decline, the kinds of losses investors haven’t experienced since 2009. It’s on track to end the three months to September down more than 3 percent, with a year — so far A loss of approximately 24 percent.

By increasing borrowing costs for consumers and businesses, central banks around the world are trying to cool demand and slow the pace of price hikes. This is important for the long-term health of the economy but is usually bad for stocks in the short-term, as higher costs drive down profits.

“Conditions are not yet in place for a sustainable shift in market sentiment,” said Mark Heffel, chief investment officer at UBS Global Wealth Management. “In our view, such an improvement would require compelling evidence that the threat from inflation has abated.”

The decline in stocks capped a busy week of trading, with a new crisis for investors emerging from Britain after a proposed tax cut stoked inflation fears and raised concerns about the country’s borrowing needs, sending the British pound sharply lower and government bond yields rising.

The sudden saw’s moves highlighted the challenges facing central banks around the world as they try to contain inflation and ease pandemic-era support measures for markets, as it prompted the Bank of England to step in and buy bonds again to help calm markets from the fallout from the financial crisis. Proposed government policies.

yield on government bonds It jumped this week, but it’s been going up significantly all year. In the US, the yield on two-year Treasuries, which is influenced by changes in Fed policy, has risen about 3.5 percentage points this year to 4.17 percent, with a whopping 1.22 percent higher in the third quarter alone. It puts the yield on course for the biggest annual increase ever.

High rates and high returns, as well as the relative economic health of the United States compared to other countries around the world, have attracted investment to Wall Street, which has helped boost the dollar when compared to a basket of other currencies that are the major trading partners of the United States. . By this measure, the dollar just saw its biggest quarterly rise since the first quarter of 2015 and the strongest in two decades.

Elsewhere, Europe’s Stoxx 600 was on course to end the quarter down nearly 12 percent, its biggest quarterly loss since the first quarter of 2020 and market turmoil caused by the pandemic.

In Japan, Topix fell 7.9 percent for the three months to the end of September, while China’s stock index – the CSI 300 – fell more than 20 percent, its worst quarterly loss since the third quarter of 2015.

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