Wall Street this September witnessed the worst month since March 2020 for S&P 500, which measures the value of the stocks of around 500 of the largest publicly traded companies in the US. The benchmark index ended with a 9.3% loss as its third straight losing quarter and now its lowest level since November 2020. 

Fear of a possible recession is one of the main driving forces behind the financial market's continued struggle amid skyrocketing interest rates expected to overcome the high inflation that has swept the world. Just last Thursday, citing Federal Reserve data, CNBC reported that the steady decline in the New York Stock Exchange (NYSE) that commenced at the beginning of this year annihilated over $9 trillion in investors’ wealth and is expected to continue - already possibly reaching the mark of $10 trillion.

Quincy Krosby, chief equity strategist for LPL Financial, said, “Quite frankly, if it’s a deep recession you’re going to have to see more of a sell-off... this is what the market is trying to navigate now.” 

Vice Chair Lael Brainard was the latest Fed official on Friday to insist it won’t pull back on rates, with plans to hold them at high levels for a while, posing a grave risk of going too far and causing a downturn.

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The S&P 500 fell 54.85 points, or 1.5%, to close at 3,585.62 Friday, posting a weekly loss in six out of the last seven weeks. The Dow Jones Industrial Average dropped 500.10 points, or 1.7%, to 28,725.51, and the Nasdaq decreased 161.89 points, or 1.5%, to 10,575.62. The tech-heavy index sank 10.5% in September and is so far this year down 32.4%. Smaller firms such as The Russell 2000 ended September down 9.7%.

“At this point, it’s not a matter of if we’ll have a recession, but what type of recession it will be,” said a portfolio manager at Thornburg Investment Management, Sean Sun. Higher interest rates impact negatively the main factors that set prices for stocks, with other determiners being the slowing economy and those spilling from corporate profits.

Carnival, the cruise ship operator dropped 23.3% as the biggest decline among S&P 500 stocks, as rivals Norwegian Cruise Line and Royal Caribbean Group slid 18% and 13.2%, respectively. Nike also went down 12.8%, its worst day in more than 20 years, after price slashes needed to clear suddenly overstuffed warehouses. Its global revenue rose only 4%, instead of the 10% it would have if currency values also maintained their rate. Looking at the third quarter, however, Netflix was among the best performers, going up 34.6% although it's still down 60.9% for the year. 

According to a report on Friday, a measure of consumer sentiment showed expectations for future inflation decreasing in September which is critical for the Fed because expectations for higher inflation can produce a self-reinforcing cycle. 

The yield on the 10-year Treasury rose to 3.81% from 3.79% late Thursday. The two-year yield, which more closely tracks expectations for Fed action, rose to 4.23% from 4.19%. The rise of the US dollar against other currencies continues to spread fear and stress of a potential crash in the global market. 

Other stock markets around the world, such as the bond markets of the UK government, face tensions that could make inflation worse, but bond markets stabilized a little after the Bank of England vowed to buy the necessary government bonds needed to bring yields back down.