U.S. stocks extended this week's downtrend Wednesday to close a choppy session with losses as the prospect of sustained higher rates and slowing growth continued to plague investor sentiment.
The S&P 500 (^GSPC) slumped 0.2%, ending a fifth straight day lower, while the Dow Jones Industrial Average (^DJI) capped trading at the flatline. The technology-heavy Nasdaq Composite (^IXIC) declined 0.5%.
In commodities markets, oil extended losses to close around $72 per barrel after a decline of roughly 10% this week to the lowest level since January.
“Fears are growing that economies are in for a rough time ahead as feverish inflation and the bitter interest rate medicine being used to bring it down take effect,” Hargreaves Lansdown senior investment and markets analyst Susannah Streeter said in a morning note, pointing also to recession warnings from U.S. bank bosses and gloomy trade data in China. “Despite today’s easing of restrictions, it’s clear China’s Covid nightmare is not at an end.”
A chorus of downbeat remarks from Wall Street leaders on Tuesday further weighed on already slumping sentiment this week as many expressed concerns over the toll of inflation and elevated interest rates on U.S. consumers.
JPMorgan Chief Executive Officer Jamie Dimon said the $1.5 trillion in excess savings across Americans’ bank accounts were being eroded by rising prices, while warning the dwindling disposable cash may "derail the economy and cause this mild or hard recession that people are worried about." Bank of America chief Brian Moynihan echoed a similar message, indicating that while consumers are still spending money, the pace is beginning to slow.
Meanwhile, Goldman Sachs (GS) CEO David Solomon projected stocks will barrel lower in 2023 and placed the probability of a soft landing at a mere 35% – a view at odds with in-house economists at his investment bank, who anticipate in their baseline forecast that the U.S. will narrowly avoid a recession next year.
"There's a very reasonable possibility that we could have a recession of some kind," Solomon said in an interview at the Wall Street Journal’s CEO Council Summit Wednesday afternoon.
Reports that China’s government will scale back some zero-COVID rules appeared to underwhelm investors weighing easing restrictions against economic data out of the nation that showed falling imports and exports in November.
Back in the U.S., shares of Campbell Soup (CPB) rose nearly 6% after the canned goods producer reported earnings that beat Wall Street estimate and raised its full-year forecast. The company said sales of soup in the U.S. jumped 11% due to increases in demand for ready-to-serve soups, condensed soups and broth, reflecting a recent shift among consumers to value food purchases as inflation continues to weigh on households.
Shares of Apple (AAPL) sank 1.4%, one day after Bloomberg News reported the iPhone-maker scaled back ambitious self-driving plans for its future electric vehicle and postponed the car's release data to 2026. Bloomberg also reported Wednesday morning that mobile industry bellwether Murata Manufacturing expects Apple will further reduce production plans for its iPhone 14 due to weakening demand.
Online used car retailer Carvana (CVNA) was also in the spotlight after plunging about 43% after the company's biggest creditors reportedly signed an agreement to cooperate in potential restructuring negotiations as the company faces growing bankruptcy risk.
Investors await another round of economic data as the Federal Reserve’s final rate-setting meeting this year approaches. Readings on weekly jobless claims, producer price inflation, and consumer sentiment are due out later this week, but the most important data point for clues on the Fed's direction for interest rates is the Consumer Price Index (CPI) out Tuesday, the same day U.S. central bank officials kick off their last two-day rate-setting meeting of 2022.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc