US stocks tumbled amid gloomy economic warnings from Wall Street bankers as concerns grow over the impact of Federal Reserve policy on economic growth and corporate earnings.
Drops in tech giants such as Apple and Microsoft hit the market hard as the Nasdaq 100 fell 2% and the S&P 500 suffered its fourth consecutive drop on Tuesday.
All companies included in the KBW Bank Heavy Securities Index declined except for two companies.
While traders were looking for shelter, the dollar rose along with Treasuries.
Goldman Sachs CEO David Solomon warned of wage and job cuts, noting that “challenging times lie ahead.”
For his part, Bank of America president Brian Moynihan said the bank is slowing down hiring as fewer employees are laid off ahead of a potential economic downturn.
As Morgan Stanley embarks on another round of job cuts, bank CEO Jamie Dimon predicts there could be “a moderate to severe recession” next year.
According to Lisa Shalit of Morgan Stanley Wealth Management, earnings for some of the largest companies could be much larger than expected next year as economic growth slows and consumer spending power falls.
In turn, Lorraine Goodwin, portfolio strategist at New York Life Investments, said: “We have not yet seen a bottom in stock prices, and although this stage of stock market volatility will likely end in the next few months, profits have not yet reached. adapted to crisis conditions.
As shaky as the markets may seem, one metric is strong in terms of what analysts think of the companies they cover.
After lowering stock price targets this past summer at a rate unheard of in history multiple times, they are backing away from their skepticism and reducing drawdowns against potential stocks to levels last seen at the start of the crash in January, according to data compiled by Bloomberg and viewed by Al Arabiya.net.
Cathy Nixon of Northern Trust Wealth Management believes that a potential lack of earnings growth in 2023 could be a limiting factor for market performance amid already high valuations.
For his part, David Palin, Chief Investment Officer at Citi Global Wealth, said: “Markets never bottom before a recession starts.”
He added: “If there really is a recession next year and we see a rise in unemployment in the country, then we expect markets to stabilize where they are today over the next few months.”
