Fears of recession pull the Dow lower


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Renewed selling on fears of a recession dragged the Dow Jones Industrial Average lower on Friday and pushed the S&P 500 into correction territory.

The 30-stock Dow fell 366.71 points, or 1.12% to close at 32,417.59. The S&P 500 slipped 0.48% to finish the session at 4,117.37, closing 10.3% lower from this year’s peak on July 31. The Dow was pressured by declines in JPMorgan Chase after CEO Jamie Dimon said he planned to sell 1 million shares next year.

The Nasdaq Composite held 0.38% higher to 12,643.01, thanks to shares of Amazon. Amazon added more than 6% after the e-commerce giant trounced analysts’ expectations for revenue and earnings in the third quarter. Other megacap tech stocks such as Microsoft followed Amazon shares higher.

The decline in key tech stocks pushed the Nasdaq into correction territory after falling more than 10% from its closing high in July on Wednesday. Last week also saw the index record its worst trading day since February.

All three major averages registered steep weekly losses. The Dow and S&P 500 are down 2.1% and 2.5%, respectively, for the week. The Nasdaq has fallen 2.6% in that time.

Disappointing earnings have pressured the market this week. Ford dropped 14% week to date after the company missed third-quarter expectations and pulled its guidance for the year, citing the UAW strike. Chevron shares were down 13% on the week, after the energy giant reported earnings.

Traders also weighed new inflation data after the core personal consumption expenditures reading for September was released ahead of the Federal Open Market Committee meeting next week. Core PCE increased 0.3% in last month and 3.7% year over year, matching estimates from economists polled by Dow Jones. Consumer spending increased 0.7%, however, surpassing estimates of 0.5%. PCE is the Federal Reserve’s preferred inflation gauge.

Turning to commodities, South Korean firms, including LG Energy and Posco Future M, are racing to buy more graphite from China ahead of December's export controls. South Korea's trade ministry is also looking to African countries for potential material shortages. This move is amid growing competition between Beijing and Washington for key resources in the energy transition and high-tech sectors.

Turning to US sectors, Consumer Discretionary was the best performer on Friday, whilst Energy was the worst.

Looking at the Australian scene, billionaire Gina Rinehart has purchased an 18% stake in Australian lithium developer Azure Minerals, potentially derailing a recent $1 billion takeover deal by Chilean miner SQM. Rinehart's Hancock Prospecting used a strategic move to acquire the stake, just below the threshold for a full takeover offer, similar to a recent tactic in the lithium sector.

Futures

The SPI futures are pointing to a 1 per cent fall.

Currency

One Australian dollar at 7:45 AM was buying 63.40 US cents.

Commodities

Gold added 0.06 per cent. Silver fell 0.09 per cent. Copper gained 1.72 per cent. Oil jumped 2.80 per cent.

Figures around the globe

European markets closed lower. London’s FTSE fell 0.86 per cent, Frankfurt lost 0.30 per cent, and Paris closed 1.36 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei added 1.27 per cent, Hong Kong’s Hang Seng gained 2.08 per cent while China’s Shanghai Composite closed 0.99 per cent higher.

On Friday, the Australian share market closed 0.21 per cent higher at 6,827.

Ex-dividends

Clover Corporation (ASX:CLV) is paying 0.75 cents fully franked
EZZ Life Science (ASX:EZZ) is paying 1 cent fully franked
Gryphon Capital (ASX:GCI) is paying 1.46 cents unfranked
Kkr Credit Inc Fund (ASX:KKC) is paying 1.67 cents unfranked
Perpetual Cred Trust (ASX:PCI) is paying 0.6788 cents unfranked
360 Capital Mortgage (ASX:TCF) is paying 3.5 cents unfranked

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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