Bloomberg - Evening Briefing - Dinner for bears

The bears were dining Friday as stocks dropped sharply, driven by investor fear of big Fed rate hikes. New evidence of America’s seemingly invincible job market, and how that will likely motivate the central bank, sent equities reeling and pushed benchmark Treasury yields to their longest weekly up streak since 1984. Almost 95% of the companies in the S&P 500 fell as Wall Street resigned itself to another 75-basis point jump. A few days ago, back-to-back rallies convinced some that markets were ready to recover. Maybe next week. Here’s your markets wrap. —David E. Rovella

After having consigned the word “transitory” to the realm of macroeconomic punch lines, the Fed has spent much of this year coming down hard on inflation. The hope of course is to loosen up the job market and slow wage rises. And while American unemployment is again at a half-century low, Friday’s jobs report does show indications of moderating demand, including a decline in job openings and an uptick in firings in some sectors. (None of this mollified the stock market, but record unemployment is welcome news for President Joe Biden, who has emphasized the strength of the labor market ahead of midterm elections next month.) Federal Reserve Bank of New York President John Williams said interest rates need to rise to around 4.5% over time, but the pace and ultimate peak of the tightening campaign will hinge on how the economy performs. “Right now,” Williams said, “the focus is getting inflation back down to 2%.”

Russia’s recent threats to use nuclear weapons amid its continued battlefield losses and illegal attempts to annex parts of Ukraine—as well as its ongoing energy throttling of Europe—haven’t rattled Kyiv or its allies. The bluster seems to have only hardened their will. But as Russia gets pushed back, Vladimir Putin—who doubled down with a massive though botched troop call-up—may have less reason to entertain a negotiated peace. And Ukraine, having suffered tens of thousands of deaths including mass executions of its civilians, is seen as unlikely to want to stop at the “contact line” that existed before the war. This lack of an off-ramp seemed to be on Biden’s mind when he spoke Thursday of the possibility of the war escalating into a confrontation with NATO, or as he said, “Armageddon.”

For a decade, low interest rates and the hunt for higher yields allowed consumers and companies to borrow with ease. Now the tightening of monetary policy in the Fed’s war on inflation has changed everything. Bloomberg Markets looks at where credit risks have built up and who may be most exposed as the cheap-money era comes to an end.

Asia’s second-wealthiest man, Reliance Industries Chairman Mukesh Ambani, is said to be setting up a family office in Singapore. He’s the latest in a series of ultra-rich people to pick Singapore for their family offices, joining the likes of hedge fund billionaire Ray Dalio and Google co-founder Sergey Brin.

Facebook-owner Meta said it would notify roughly 1 million users of the social media platform that their account credentials may have been revealed due to security issues with certain apps.

Soaring rents, meals and everything else are pushing younger workers to bail on New York City. They’re seeking out more affordable cities as they question if the grind is worth it. 

In the US, Covid-19 hospitalization numbers are at their lowest levels since early 2020. A new booster directed at the dominant omicron variant has drawn relatively few takers. Incorrect references to the pandemic using the past tense are proliferating. But the fact is that it’s not over. On average, more than 1,200 people worldwide die from the disease each day—and a quarter of them are American. And now, in what’s become a regular feature of fall, a new wave of infections may be looming for the US. Hospitalizations in Europe are rising at a fast clip, and America usually follows. 

Bloomberg continues to track the global coronavirus pandemic. Click here for daily updates.

• This was Tesla’s week to forget—it’s the anchor weighing down the S&P.
• Chipmakers are seeing a “breathtaking” drop in demand. 
• You don’t have to look: Stock drops and inflation are melting your 401(k).
• Bloomberg Opinion: Biden should hit Saudi Arabia where it hurts.
• Hackers target eager homebuyers with a dumb scam that works.
• Porsche power: The family is back in control of the storied brand. 
• First it was the Times. Now Michelin drops the boom on Peter Luger.

An immaculately preserved house designed by Frank Lloyd Wright just 30 minutes away from Manhattan is hitting the market. The four bedroom, 2 1/2-bathroom house covers about 2,620 square feet and sits on 2.5 acres in Blauvelt, New York, on the west bank of the Hudson River. Have a look.

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Bloomberg Invest: This year has seen the worst performance for equities and bonds since the 1970s. Aggressive rate hikes from the Fed, supply chain issues and geopolitical events have contributed to a challenging environment. Join us in New York or virtually Oct. 12-13 where we’ll hear from the most influential figures in investing and markets about how they’re navigating a rapidly changing economic landscape.