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Wall Street falls for the fourth consecutive day as the recession worries

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  • Fed hike, recession fears take center stage
  • L3Harris slips after $4.7 billion takeover of Aerojet Indices down: Dow 0.49%, S&P 0.90%, Nasdaq 1.49%

Dec 19 (Reuters) – Wall Street closed lower on Monday for a fourth consecutive session with the Nasdaq leading the declines as investors shunned riskier bets on fears the Federal Reserve’s tightening campaign could plunge the US economy in a recession.

The three major U.S. stock indexes have been under pressure since Wednesday, when Fed Chairman Jerome Powell struck a hawkish tone as the central bank raised interest rates. Powell promised further rate hikes even as data showed signs of a weakening economy.

The S&P 500 (.SPX)Dow Jones Industrialists (.DJI) and the Nasdaq sold off sharply in December and is on track for its biggest annual declines since the 2008 financial crisis.

As U.S. Treasury yields rose, investors fled equities, eyeing prospects for safer bets as they worried about the likelihood of a recession in 2023, according to Brian Overby, senior market strategist at Ally.

“Investors are asking why do I want to take these risks in 2023 with the Fed’s still aggressive stance when I can get such a good return in the fixed income market,” he said.

According to Melissa Brown, global head of applied research at Qontigo in New York, the lack of big earnings reports or economic data on Monday likely heightened investors’ focus on economic fears and interest rates.

“It’s a knife’s edge between whether we’re going to tip into a recession or have a soft landing. Is the Fed acting appropriately?” said Brown who also noted that the moves may be overdone as many investors take vacations around the year-end holidays.

The Dow Jones Industrial Average (.DJI) fell 162.92 points, or 0.49%, to 32,757.54, the S&P 500 (.SPX) fell 34.7 points, or 0.90%, to 3,817.66 and the Nasdaq Composite (.IXIC) fell 159.38 points, or 1.49%, to 10,546.03.

Communication services is the sector that has fallen the most among the industrial sectors of the S&P (.SPLRCL)down 2.2%, consumer discretionary (.SPLRCD)down 1.7% and technology (.SPLRCT), which lost 1.4%. Energy (.SPNY) outperformed, closing up 0.13% as the only industry out of 11 to manage a gain.

Market heavyweights like Apple Inc (AAPL.O)Microsoft Corporation (MSFT.O) and Inc. (AMZN.O) created some of the biggest drags on the market.

Tesla Inc Trading (TSLA.O) It was volatile, with the electric car maker closing down 0.24% after falling 2.8% during the session. It was after a Twitter poll it showed that a majority of respondents want Tesla Chief Executive Elon Musk to step down as CEO of the social media platform.

Metaplatforms (META.O) shares ended down 4.1% after the European Commission said it could impose a fine up to 10% of the tech conglomerate’s annual worldwide turnover if evidence showed a breach of EU antitrust laws.

L3Harris Technologies Inc (LHX.N) lost 3.6% after the United States defense contractor said it would buy hypersonic engine maker Aerojet Rocketdyne Holdings Inc (AJRD.N) for $4.7 billion. Aerojet added 1.3%.

Shares of casino operators Melco Resorts & Entertainment fell just under 8% and Wynn Resorts (WYNN.O) lost 5.2% while Las Vegas Sands Corp (LVS.N) fell 2.3% after Macau announced on Friday that six casino companies would invest around $15 billion under new 10-year contracts they signed to operate in the world’s largest gambling center.

Falling issues outnumbered rising ones on the NYSE by a ratio of 2.80 to 1; on the Nasdaq, a ratio of 2.63 to 1 favored the 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 US exchanges, 11.07 billion shares changed hands, compared to an average of 11.59 billion for the past 20 trading days.

Reporting by Sinéad Carew, Sruthi Shankar, Shubham Batra, Johann M Cherian and Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty, Maju Samuel and David Gregorio

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