Wall Street’s largest banks sound the alarm… and the US market is in turmoil By Investing.com

Investing.com – Wall Street’s major indices struggled to maintain their direction on growing concerns that the Federal Reserve’s tightening monetary policy could lead to a recession and hurt corporate earnings, while Apple and Tesla were the biggest impediments to the rally.

It fell for the fifth consecutive session on Wednesday.

The Nasdaq fell for the fourth consecutive session, dragged down by Apple (NASDAQ:) falling 1.3% on expectations of Morgan Stanley (NYSE:) cutting Apple shipments, and Tesla (NASDAQ:) falling 3.9% on concern about production losses.

Markets were also swayed by downbeat comments from CEOs at Goldman Sachs, JPMorgan (NYSE:) Chase, and Bank of America on Tuesday that a mild-to-moderate recession was becoming clearer ahead.

Concerns that the US central bank may stick to a longer cycle of interest rate hikes intensified in the wake of the recent strong jobs report and services sector reports.

More economic data, including Weekly Jobless Claims, PPI, and the University of Michigan Consumer Sentiment Survey will be released this week and will be on your watch list for clues on what to expect from the Fed on December 14th.

“When (investors) look at earnings estimates for the remainder of 2022 and through 2023, they are not thinking of a recession in 2023,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

“There is some revision to earnings estimates over the next 12 months and I think that is what provides a little pressure on the markets.”

The CBOE Volatility Index, also known as a measure of fear on Wall Street, rose to a two-week high of 23.01 points.

Money market participants see a 91% chance that the Fed will increase its key rate by 50 basis points in December to 4.25%-4.50%, with rates peaking in May 2023 at 4.93%.

Concerns about a sharp rise in borrowing costs have boosted the dollar, but have dampened demand for riskier assets such as equities this year. The S&P 500 is on track for a three-year winning streak, down 17.4% so far in 2022.