Stocks continued their slide for a third straight day as investors come to terms with the idea that despite a few weeks of relief from 2022's market tumult, there's still more pain to come.
The S&P 500 fell below the 4,000 level on Tuesday for the first time since July, breaking its 50-day moving average and cutting its rally from the mid-June low to just 8.7%. The Dow Jones Industrial Average and Nasdaq Composite are about 6% and 11%, respectively, off their mid-June lows. Both indexes have lost more than half their gains from the bottom.
All of the major averages are on track for a losing month ahead of September, which historically has been the worst month of the year for stocks.
Early in the day, the market briefly moved higher but stumbled following inflation-fighting comments from New York Fed President John Williams and European Central Bank policymaker and Estonian central bank Governor Madis Muller.
The labor market was in the spotlight Tuesday after the Bureau of Labor Statistics reported that open jobs remained plentiful for the month of July. Still, stocks continued to tumble as investors interpreted the data as giving more reason for the Fed to keep tightening.
"It is the so-called 'stickiness' of higher wages that concerns Fed economists because higher wages… lead to higher prices, ultimately causing a classic wage/price spiral," said LPL Financial's Quincy Krosby. "For an inflation-fighting central bank, what's good news on Main Street now makes the job to rein in inflation that much more difficult."
Investors are looking forward to the Friday jobs report, although some say a strong number would only reinforce the central bank's commitment to lowering inflation.
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