New York (AFP) - Wall Street stocks fell sharply Wednesday as markets weighed the odds for further equity losses as the end of the "bear market" of 2022 comes into view.
"We are in a bear market," said Adam Sarhan of 50 Park Investment."The good news is the market valuation has gone down significantly over the last six to 12 months and that sets the stage for the next bull market.
"However there is still a lot more value compression that can occur before we get to the end of this bear market."
After a positive start to the day, US indices slid into the red, with losses growing amid light holiday-season trading volumes.The broad-based S&P 500 ended 1.2 percent lower.
The US losses came on a down day for most bourses as hopes for a so-called "Santa Claus rally" ebb.
The "Santa Claus rally" is a seven-session stretch over Christmas and New Year that typically sees stocks drifting higher amid light trading volumes.
London's FTSE 100, back after a four-day Christmas break, finished 0.3 percent higher than its Friday close, but most other major markets fell.
"Checking in on Santa Claus, he hasn't left the building but he seems somewhat stuck in a revolving door," said Briefing.com analyst Patrick O'Hare.
Investors have been fretting about the risk of recession as central banks have been raising interest rates in efforts to curb inflation.Higher borrowing costs lead to slower economic activity.
"There isn't much confidence or appetite for riskier assets among investors and traders," Naeem Aslam, chief market analyst at AvaTrade, told AFP.
"We are most likely to see this trend continue with very little volume in the market," Aslam said.
Investors are also grappling with what to expect from China's pivot on Covid-19 restrictions.
Beijing has abruptly reversed tight pandemic curbs that kept the world's second-largest economy isolated since 2020.
On Monday, Beijing announced it was ending quarantine measures for overseas arrivals from January 8, the latest move to loosen its zero-Covid regime, after it dropped mandatory testing and lockdowns earlier this month.
China's scrapping of curbs has spurred hopes for its economic revival.
"The good news is that inflation subsides as China reprises its role as a supplier of low-cost goods globally and supply chain bottlenecks ease," said analyst Stephen Innes of SPI Asset Management.
However, he also warned that China's accelerating demand would push up prices for commodities, in turn further fueling global inflation.
Meanwhile, Hong Kong stocks jumped as investors digested the Covid news from Beijing on the first trading day after the Christmas break.
Hong Kong chief executive John Lee also announced a further easing of the city's remaining Covid measures.
Key figures around 2215 GMT
New York - Dow: DOWN 1.1 percent at 32,875.71 (close)
New York - S&P 500: DOWN 1.2 percent at 3,783.22 (close)
New York - Nasdaq: DOWN 1.4 percent at 10,213.29 (close)
London - FTSE 100: UP 0.3 percent at 7,497.19 (close)
Frankfurt - DAX: DOWN 0.5 percent at 13,925.60 (close)
Paris - CAC 40: DOWN 0.6 percent at 6,510.49 (close)
EURO STOXX 50: DOWN 0.6 percent at 3,808.82 (close)
Tokyo - Nikkei 225: DOWN 0.4 percent at 26,340.50 (close)
Hong Kong - Hang Seng Index: UP 1.6 percent at 19,898.91 (close)
Shanghai - Composite: DOWN 0.3 percent at 3,087.40 (close)
Euro/dollar: DOWN at $1.0618 from $1.0640 on Tuesday
Pound/dollar: DOWN at $1.2018 from $1.2025
Euro/pound: DOWN at 88.30 pence from 88.48 pence
Dollar/yen: UP at 134.39 yen from 133.49 yen
West Texas Intermediate: DOWN 0.7 percent at $78.96 per barrel
Brent North Sea crude: DOWN 1.3 percent at $83.26 per barrel
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