ASX set to fall as Wall Street wobbles; Oil drops

Stocks gave up more ground on Thursday, leaving major indexes on Wall Street deeper in the red for the week.

The S&P 500 fell 1.1 per cent after another wobbly day of trading. The benchmark index is now down 4.1 per cent for the week following the biggest pullback for the market in more than two years on Tuesday.

The Dow Jones Industrial Average fell 0.6 per cent and the Nasdaq composite slid 1.4 per cent. The Russell 2000 index of smaller companies closed 0.7 per cent lower. The Australian sharemarket is set to open lower, with futures at 5.06am AEST pointing to a fall of 45 points, or 0.7 per cent, at the open. On Thursday, the ASX rose by 0.2 per cent.

New retail sales data gave a mixed view of how consumers are coping with the hottest inflation in four decades. The government report showed that retail sales rose an unexpected 0.3 per cent in August after falling 0.4 per cent in July. Inflation hurt several areas of spending, though, with business at restaurants still growing, but at a slower pace, while furniture and online sales fell.

Consumer spending has been a strong point in the broader economy, along with employment, as inflation continues to squeeze businesses and consumers. High prices and the Federal Reserve’s aggressive plan to raise interest rates as a solution remains Wall Street’s main focus. Investors also worry the Fed’s rate hikes will tip the economy into a recession that could hurt company earnings.

“The market has to contend with rapidly tightening monetary conditions, which tend to take time to flow through to the real economy,” said Bill Merz, head of capital market research at US Bank Wealth Management. “There’s an element to this of uncertainty around just how much additional on-the-ground impact will be felt in the real economy by restrictive monetary policy and I don’t think we really know that yet.”

The S&P 500 fell 44.66 points to 3,901.35. The Dow dropped 173.27 points to 30,961.82. The Nasdaq fell 167.32 points to 11,552.36. The Russel 2000 gave up 13.23 points to1,825.23.

Technology stocks were among the biggest weights on the broader market. Adobe slumped 16.8 per cent, the largest drop among S&P 500 stocks, after the software maker announced a $US20 billion ($30 billion) acquisition of a design company and issued a disappointing revenue forecast.