Wall Street closed lower on Monday for a fourth straight session with Nasdaq leading declines as investors shied away from riskier bets, worried the Federal Reserve's tightening campaign could push the U.S. economy into a recession.
The three major U.S. stock indexes have been under pressure since Wednesday, when Fed Chair Jerome Powell took a hawkish tone while the central bank raised interest rates. Powell promised further rate increases even as data showed signs of a weakening economy.
The S&P 500 (.SPX), the Dow Jones industrials (.DJI) and the Nasdaq have sold off sharply for December and are on track for their biggest annual declines since the 2008 financial crisis.
While U.S. Treasury yields gained, investors ran from stocks, eyeing prospects of safer bets as they worried about the likelihood of a recession in 2023 according to Brian Overby, senior markets strategist at Ally.
"Investors are asking why do I want to take those risks going into 2023 with the Fed's stance still aggressive when I can get such a good yield on the fixed income market place," he said.
The lack of big earnings reports or economic data on Monday likely sharpened investors' focus on economic fears and interest rates, according to Melissa Brown, Global Head of Applied Research at Qontigo in New York.
"It's a knife edge between whether we're going to teeter into a recession or have a soft landing. Is the Fed acting appropriately?" said Brown who also noted that moves may be exaggerated as many investors take vacation around the end-of-year holidays.
The Dow Jones Industrial Average (.DJI) fell 162.92 points, or 0.49 per cent, to 32,757.54, the S&P 500 (.SPX) lost 34.7 points, or 0.90 per cent, to 3,817.66 and the Nasdaq Composite (.IXIC) dropped 159.38 points, or 1.49 per cent, to 10,546.03.
The biggest decliners among S&P industry sectors were communications services (.SPLRCL), which fell 2.2 per cent, consumer discretionary (.SPLRCD), down 1.7 per cent and technology (.SPLRCT), which lost 1.4 per cent. Energy (.SPNY) outperformed, closing up 0.13 per cent as the sole industry out of 11 to manage a gain.
Market heavyweights such as Apple Inc (AAPL.O), Microsoft Corp (MSFT.O) and Amazon.com Inc (AMZN.O) created some of the biggest drags on the market.
Trading in Tesla Inc (TSLA.O) was volatile with the electric carmaker closing down 0.24 per cent after falling as much as 2.8 per cent during the session. This was after a Twitter poll that showed a majority of respondents want Tesla Chief Executive Elon Musk to step down as CEO of the social media platform.
Meta Platforms (META.O) shares finished down 4.1 per cent after the European Commission said it could impose a fine of up to 10 per cent of the tech conglomerate's annual global turnover if evidence showed an infringement of the EU's antitrust laws.
L3Harris Technologies Inc (LHX.N) lost 3.6% after the U.S. defense contractor said it would buy hypersonic engine manufacturer Aerojet Rocketdyne Holdings Inc (AJRD.N) for $4.7 billion. Aerojet added 1.3 per cent.
Shares of casino operators Melco Resorts & Entertainment tumbled just under 8% and Wynn Resorts (WYNN.O) lost 5.2 per cent while Las Vegas Sands Corp (LVS.N) fell 2.3 per cent after Macau said on Friday that six casino firms will invest around $15 billion as part of new 10-year contracts they signed to operate in the world's biggest gambling hub.
Declining issues outnumbered advancing ones on the NYSE by a 2.80-to-1 ratio; on Nasdaq, a 2.63-to-1 ratio favored decliners.
The S&P 500 posted 5 new 52-week highs and 20 new lows; the Nasdaq Composite recorded 66 new highs and 456 new lows.
On U.S. exchanges 11.07 billion shares changed hands, compared with the 11.59 billion average for the last 20 trading days.
