S&P 500 posts worst day in more than a month, Dow closes 600 points lower

The Dow Jones Industrial average tumbled more than 600 points on Wednesday as investors took profits on some of the strong 2023 January gains and as a disappointing December retail sales reading raised concerns about a recession. Shares of banks led the losses.

The Dow Jones Industrial Average fell 613.89 points, or 1.81%, to 33,296.96. The S&P 500 lost 1.56% to close at 3,928.86, its lowest level since Dec. 15. The Nasdaq Composite slid 1.24% to end the day at 10,957.01, snapping a seven-day win streak.

“We’ve had such a strong start to the year, but now we’re amid a tense earnings season, recently got weaker data — retail sales and yesterday’s Empire State Manufacturing Survey. Plus the Fed meeting on Feb. 1st is looming large,” said Yung-Yu Ma, chief investment strategist for BMO Wealth Management. “There’s not a whole lot of reason to get aggressive here, but all of those factors above suggest that caution is warranted in the near term.”

JPMorgan, Bank of America and Wells Fargo fell as the 10-year U.S. Treasury yield slid to its lowest level since September. Shares of regional banks like Zions and Fifth Third were larger posted bigger losses.

Elsewhere, Microsoft announced plans to lay off about 10,000 employees, which hurt investor sentiment. The stock fell and dragged the Dow lower with it.

In economic data, investors digested the latest retail sales numbers, which showed a drop of 1.1% in December, slightly more than the 1% forecast.

They also weighed the latest reading on the producer price index, which measures input costs from companies. The PPI showed a 0.5% decline for December. Economists surveyed by Dow Jones expected a 0.1% decline. That briefly gave relief to investors who have hoped for inflation to retreat and for the Federal Reserve to slow its rate-hiking campaign.

Investors had been enjoying strong upward momentum for stocks since the start of the year, although many had begun to doubt the market’s strength even before Wednesday’s slide. The Dow is still higher by 0.45% for the month, while the S&P and Nasdaq are still up by 2.33% and 4.69%, respectively.