Stocks dropped Friday as investors continued to sell into year-end on fears a recession is ahead next year because of the Federal Reserve’s unrelenting rate hiking. The Dow shed 0.85%. The S&P 500 fell 1.12%. The Nasdaq lost 0.97%.
Stocks come off session lows in final hour of trading
Christopher Harvey, head of equity strategy at Wells Fargo Securities, said the labor market has grown in significance following Federal Reserve Chair Jerome Powell's most recent press conference. The Fed chair cited the persistence of wage inflation, even as inflation in goods and shelter appear to be slowing down.
A large amount of options that are expiring on Friday is causing big swings for markets, with the Dow down more than 400 points in afternoon trading. There are $2.6 trillion worth of index options set to expire, according to Goldman Sachs."With the S&P 500 close to the key technical level of 3,900 – and now oversold by most measures – today's market could surprise to the upside especially given the surge expected in volume," Krosby wrote in a Friday note.
"There is an unfilled gap on SPX at 3,818 from the November 10th CPI gap," Krinsky wrote in a Friday note. "Should we get down there, that would likely represent a decent bounce point. Our best guess is SPX finds some support in the 3,818-3,830 range, and we see some consolidation into early next week."Still, Krinsky identified some sectors such as industrials and semiconductors as "far from oversold," and expects they'll continue to see downside from here.
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