Wall Street ended a miserable September on Friday with the S&P 500's worst monthly performance since March 2020, when the coronavirus pandemic crashed global markets.
The benchmark index made a 9.3 per cent loss and posted its third straight losing quarter. It is now at its lowest level since November 2020 and is down by more than a quarter since the start of the year.
The main reason financial markets continue to struggle is fear about a possible recession, as interest rates soar in hopes of beating down the high inflation that has swept the world.
“Quite frankly, if it’s a deep recession you’re going to have to see more of a sell-off,” said Quincy Krosby, chief equity strategist for LPL Financial. “This is what the market is trying to navigate now.”
The Federal Reserve has been at the forefront of the campaign to slow economic growth and hurt job markets just enough to undercut inflation, but not so much that it causes a recession.
On Friday, the Fed's preferred measure of inflation showed it was worse last month than economists expected. That should keep the Fed on track to keep increasing rates and hold them at high levels a while, raising the risk of it going too far and causing a downturn.
Fed vice-chairwoman Lael Brainard was the latest official on Friday to say it will not pull back on rates prematurely.
“At this point, it’s not a matter of if we’ll have a recession, but what type of recession it will be,” said Sean Sun, portfolio manager at Thornburg Investment Management.
All told, the S&P 500 fell 54.85 points, or 1.5 per cent, to close at 3,585.62 on Friday, after flipping between small losses and gains in early session. It has now posted a weekly loss in six out of the past seven weeks.
The Dow Jones Industrial Average dropped 500.10 points, or 1.7 per cent, to 28,725.51. The Nasdaq composite slid 161.89 points, or 1.5 per cent, to 10,575.62. The tech-heavy index sank 10.5 per cent in September and is down 32.4 per cent so far this year.
Smaller company stocks also had a rough September. The Russell 2000 ended the month down 9.7 per cent. On Friday, it lost 10.21 points, or 0.6 per cent, to 1,664.72.
Higher interest rates knock down one of the main levers that set prices for stocks. The other lever also looks to be under threat as the slowing economy, high interest rates and other factors weigh on corporate profits.
Cruise ship operator Carnival dropped 23.3 per cent for the biggest decline among S&P 500 stocks after it reported a bigger loss for its latest quarter than analysts expected and revenue that fell short of expectations.
Rivals Norwegian Cruise Line and Royal Caribbean Group slid 18 per cent and 13.2 per cent, respectively.
Nike slumped 12.8 per cent, its worst day in more than 20 years, after it said its profitability weakened during the summer because of discounts needed to clear suddenly overstuffed warehouses. The amount of shoes and gear in Nike’s inventories swelled by 44 per cent from a year earlier.
This year's surge for the US dollar against other currencies also hurt Nike. Its worldwide revenue rose only 4 per cent, instead of the 10 per cent it would have if currency values had remained the same.
Nike is not the only company where inventories ballooned. So have several big-name retailers, and such bad news for businesses could mean some relief for shoppers if it leads to more discounts.
It echoed some notes of encouragement buried within Friday's report on the Fed's preferred gauge of inflation. That showed some slowing of inflation for goods, even as price gains kept accelerating for services.
Another report on Friday also offered a glimmer of hope. A measure of consumer sentiment showed US expectations for future inflation came down in September.
Treasury yields initially eased a little on Friday, letting off some of the pressure that has built on markets, but then turned higher by late afternoon.
The yield on the 10-year Treasury rose to 3.81 per cent from 3.79 per cent late Thursday. The two-year yield, which more closely tracks expectations for Fed action, rose to 4.23 per cent from 4.19 per cent.
Not all stocks took a beating in September. Biogen soared 35 per cent, but it was an outlier. FedEx was among the market's biggest losers, ending the month 29.6 per cent lower.
Looking at the third quarter, which included a market rally in July, Netflix was among the best performers, climbing 34.6 per cent. It is still down 60.9 per cent for the year.
A long list of other worries continues to hang over global markets, including increasing tensions between much of Europe and Russia following the invasion of Ukraine.
A controversial plan to cut taxes by the UK government also sent bond markets spinning recently on fears it could make inflation even worse. Bond markets calmed a little only after the Bank of England pledged to buy however many UK government bonds are needed to bring yields back down.
Cost of living crisis in the UK — in pictures
The swift rise of the US dollar against other currencies, meanwhile, raises the risk of creating so much stress that something cracks somewhere in global markets.
Stocks around the world were mixed after a report showed that inflation in the 19 countries that use Europe's euro spiked to a record and data from China said that factory activity weakened there.
Scoreline:
Everton 4
Richarlison 13'), Sigurdsson 28', Digne 56', Walcott 64'
Manchester United 0
Man of the match: Gylfi Sigurdsson (Everton)
UAE currency: the story behind the money in your pockets
'Moonshot'
Director: Chris Winterbauer
Stars: Lana Condor and Cole Sprouse
Rating: 3/5
The%20specs
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Donating your hair
• Your hair should be least 30 cms long, as some of the hair is lost during manufacturing of the wigs.
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The 12 Syrian entities delisted by UK
Ministry of Interior
Ministry of Defence
General Intelligence Directorate
Air Force Intelligence Agency
Political Security Directorate
Syrian National Security Bureau
Military Intelligence Directorate
Army Supply Bureau
General Organisation of Radio and TV
Al Watan newspaper
Cham Press TV
Sama TV
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Gulf Under 19s final
Dubai College A 50-12 Dubai College B
More coverage from the Future Forum
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)