S&P 500 worst day in more than a month, Dow closes down 600 points

Traders work on the floor of the New York Stock Exchange during morning trading on January 17, 2023 in New York City.

Michael M. Santiago | Getty Images

The Dow Jones Industrial Average plunged more than 600 points on Wednesday as investors booked profits on some of the strong January 2023 gains and disappointing December retail sales readings raised concerns about a recession. Bank shares led the losses.

The Dow Jones Industrial Average fell 613.89 points, or 1.81%, to 33,296.96. The S&P 500 closed down 1.56% at 3,928.86, its lowest level since December 15. The Nasdaq Composite closed down 1.24% at 10,957.01, snapping a seven-day winning streak.

“We started the year so strong, but now we’re in the midst of a tense earnings season, given weak data recently – retail sales and yesterday’s Empire State Manufacturing survey. Plus the Fed meeting on Feb. 1 looms large.” is,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. “There aren’t a lot of reasons to be aggressive here, but all of the above factors suggest that caution is warranted in the near term.”

Dow Jones Industrial Average on Wednesday

JPMorgan, Bank of America and Wells Fargo fell as the 10-year US Treasury yield fell to its lowest level since September. Shares of regional banks such as Zions and Fifth Third registered major losses.

Elsewhere, Microsoft announced plans to lay off around 10,000 employees, hurting investor sentiment. Stocks fell, contributing to the Dow’s decline.

In economic data, investors digested the latest retail sales numbers, which showed a 1.1% decline in December, slightly above the 1% forecast. The report suggested that consumers are slowing their spending, with department stores reporting a 6.6% drop and online sales down 1.1%.

Investors also weighed the latest readings on the producer price index, which measures input costs from companies. The PPI showed a decline of 0.5% for December. Economists polled by Dow Jones had expected a decline of 0.1%.

Investors have been enjoying a strong rally for stocks since the start of the year, though many had already begun to doubt the market’s strength even before Wednesday’s drop. The Dow is still up 0.45% for the month, while the S&P and Nasdaq are still up 2.33% and 4.69%, respectively.

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