S&P 500 closes at new 2022 low, as Apple helms broad market sell-off

With only one trading day left in the third quarter, the S&P 500 is on track to decline a third straight quarter for the first time since the first quarter of 2009, in the midst of the Global Financial Crisis. The same is true for the Russell 2000 index of smallcap stocks, and the Russell 1000 indexes of both growth and value stocks.

The Nasdaq-100 index is poised for even worse performance. Its third straight quarterly decline will be the worst since the third quarter of 2002.

At the opposite end of the spectrum is the U.S. Dollar index. Its on the verge of gaining for the fifth straight quarter for the first time since the Q1 of 1998.

— Scott Schnipper, Christopher Hayes

Cleveland Federal Reserve President Loretta Mester said interest rates are not yet restrictive, and there's more to be done to bring down inflation.

"Inflation is still at a 40 year high," Mester told CNBC's Steve Liesman during an appearance on "Squawk Box." "So right now the conversation has to be we have to do, what we must do to get back to price stability, because we can't have a healthy economy, we can't have good labor markets over time, unless we get back to price stability."

Mester said she's probably "a little bit above the median path" among Fed officials when it comes raising interest rates, citing the persistence in inflation.

"We're still not even in restrictive territory on the funds rate, so you're right, we've moved the funds rate up 300 basis points this year, but look how high inflation is," Mester said.

— Sarah Min

September is living up to its bad reputation. It's been the worst month for the S&P 500 since 1950 with an average loss of 0.5%, according to The Stock Trader's Almanac. No other month averages a decline. So far this month, the S&P 500 is down 8.5%.

October averages a gain of 0.8%, according to the almanac, which is typical for any given month. However, October still makes many traders uneasy because of its reputation for market crashes.

— John Melloy

The 2022 bear market has erased most of the S&P 500's gains since the pandemic began. As of roughly 2:30 p.m. ET, the benchmark index traded just 6.9% above its pre-pandemic closing high of 3,386.

The stat was first highlighted by Bespoke Investment Group in a tweet.

— Fred Imbert

Traders are getting increasingly pessimistic, as shown by Thursday's sell-off, said Adam Crisafulli of Vital Knowledge.

"The gloom is back, and it's even worse than ever," Crisafulli said in a note. "A slew of items are contributing to the Turs malaise, including the very hot German CPI, more hawkish remarks from the Fed and ECB (Mester doesn't even think policy is in restrictive territory yet), some horrendous earnings reports (KMX and RAD especially), the defiant tone of the Truss gov't when it comes to the disastrous UK fiscal plan, a drop in weekly US claims back below 200K," among others.

"Sellers took a break on Wed, but they're back in force so far today, and there isn't a bull in sight trying to defend the tape," he added.

— Fred Imbert, Michael Bloom

The resumption of the sell-off on Thursday dragged key indexes and a slate of funds to fresh 52-week lows.

The S&P 500 tumbled to 3,619.69 at one point during the trading session, marking a new low for the index. Meanwhile, the Russell 1000 fell to 1,988.58 amid the day's sell-off.

ETFs sliding to new 52-week lows include:

• iShares Semiconductor ETF
• VanEck Semiconductor ETF
• SPDR S&P Retail ETF
• iShares U.S. Aerospace & Defense ETF
• Technology Select Sector SPDR Fund
• Consumer Staples Select Sector SPDR Fund
• iShares MSCI Emerging Markets ETF

-Darla Mercado, Gina Francolla

These are some of the stocks making the biggest moves during midday trading on Thursday.

• Apple — Shares of the iPhone maker shed 5% following a rare downgrade of Apple to neutral by Bank of America.
• CarMax — The used auto dealer's shares plummeted 23.2% after it released second-quarter earnings below analyst expectations.
• Bed Bath & Beyond – Shares of the home retailer shed more than 8% Thursday after the company reported a wider-than-projected quarterly loss and a 28% decline in sales for its most recent quarter.  

Read the full list of stocks moving midday here.

— Samantha Subin

The latest American Association of Individual Investors survey shows bearish sentiment in the week ending Wednesday Sept. 28 at 60.9% — the first time in more than 1,800 weekly readings going back to 1987 that bearish sentiment topped 60% for two weeks running. Last week's bearish reading stood at 60.9%, but two weeks ago it was only 46%.

The percentage of bulls has stayed between 18-20% the past two weeks, down from 26% in the week ended Sept. 14. What's shifted more is the number of respondents who are neutral on stocks — 19.2% now vs 27.9% on Sept. 14 and 28.7% earlier in the month.

Contrarians look at all that favorably, arguing that it means fewer sellers are left to push prices lower and the market's washed out.

In the latest Investors Intelligence survey, also dated Sept. 28, the percentage of bullish financial newsletter editors slumped to 25.4% — the lowest early 2016, and below even the mid-June reading of 26.5% bulls that corresponded with the prior stock market low.

The number of II bears climbed to 34.3% from 31.4% the week before. The largest II group is in the "correction" camp, at 40.3%.

Or, as II says, "Lots of advisor pessimism ultimately signals the market bottom."

— Scott Schnipper

At least 88 stocks in the S&P 500 hit new 52-week lows in midday trading. Meanwhile, pharmaceutical stock Organon fell to all-time lows going back to its spin-off from Merck in June 2021.

Here are some of the names:

• Alphabet A share (GOOGL) trading lows not seen since Feb, 2021
• Lumen Technologies (LUMN) trading at lows not seen since Sept, 1991
• Paramount (PARA) trading at lows not seen since May, 2020
• AT&T (T) trading at lows not seen since Apr, 2008
• BorgWarner (BWA) trading at lows not seen since May, 2020
• Caesars Entertainment (CZR) trading at lows not seen since Aug, 2020
• Hasbro (HAS) trading at lows not seen since May, 2020
• CarMax (KMX) trading at lows not seen since Apr, 2020
• Newell Brand (NWL) trading at lows not seen since June, 2020
• PVH Corp. (PVH) trading at lows not seen since July, 2020
• VF Corp. (VFC) trading at lows not seen since July, 2012
• Colgate-Palmolive (CL) trading at lows not seen since June, 2020
• Estee Lauder (EL) trading at lows not seen since Nov, 2020
• Kimberly-Clark (KMB) trading at lows not seen since Mar, 2020
• Tyson Foods (TSN) trading at levels not seen since Feb, 2021
• Walgreens Boots Alliance (WBA) trading at lows not seen since July, 2012
• AIG (AIG) trading at lows not seen since Aug, 2021
• Franklin Resources (BEN) trading at lows not seen since Nov, 2020
• Organon (OGN) trading at all-time lows back to its spin-off from Merck in June, 2021

— Chris Hayes, Sarah Min

Earnings resilience throughout the third-quarter reporting season should help propel stocks higher later this year, according to Citi.

"We are set up for a risk-on rally, call it a relief rally, at some point during Q4," Citi U.S. equity strategist Scott Chronert said Thursday on "Squawk on the Street."

On top of that, there could be a shift in perception around Federal Reserve interest rate hikes that may also help trigger a rally, he said.

Chronert's current year-end price target on the S&P 500 is 4,200, which implies a nearly 13% upside from Wednesday's close.

CNBC Pro subscribers can read more here.

— Michelle Fox

Societe Generale's Albert Edwards said the market sell-off won't end until the Federal Reserve is forced to pivot.

The global strategist wrote in a Thursday note that the Bank of England's pivot from an aggressive tightening campaign suggests investors are in charge. The Bank of England this week announced bond-buying efforts to stabilize its stock and bond markets and the cratering British pound.

Late last week, yields on 2-year U.K. government bonds hit their highest level since October 2007, and 10-year yields reached the highest level since 2010. Bond yields move inversely to prices.

"While most press attention is on sterling's weakness, it is UK Gilts that have crashed horribly. But the markets have proved that, as in 2018, QT is not 'boring like watching paint dry' and they have forced the BoE into an ignominious Powell-like pivot. What comes next? 'Not-QE' comes next," Edwards wrote.

"The bottom line is, after decades of central bank stimulus inflating bubbles and financial leverage to grotesque heights, the markets are still in charge and they just won't tolerate QT," Edwards wrote.

— Sarah Min

CarMax shares are down about 23% Thursday after the company reported a huge earnings miss. The used car dealer put the blame on "vehicle affordability challenges." But used car prices have been elevated for at least a year. So what's changed?

CEO Bill Nash said consumers are having to make more decisions about how to spend money.

"Groceries are higher than ever," Nash said. "I think we've seen more interest rates increases. ... So I just think consumers are prioritizing their spend a little differently."

—Christina Cheddar Berk, Robert Hum

The Global X Autonomous & Electric Vehicles ETF (DRIV) fell 4.5% on Thursday and was on pace for its worst day since mid-June.

The fund is also on pace for its worst month since June, down 13.1%. XPeng, QuantumScape, Visteon and Nio led the losses. They were all down by more than 8%.

Here are some of the biggest names in the fund and their losses before noon Thursday.

• Lucid Group: -6.5%
• Tesla: -5%
• Ambarella: -5%
• Ford Motor: -5%
• NVIDIA: -4%

— Tanaya Macheel

Shares of Occidental Petroleum jumped 1.7% Thursday, bucking the down trend in the broader market, after Warren Buffett's Berkshire Hathaway added to its massive stake in the oil giant.

The conglomerate added about 6 million shares of the oil giant, worth approximately $350 million, from Monday to Wednesday, paying as much as $61.37 per share, according to a regulatory filing. Berkshire's stake in Occidental has now reached 20.8% after steadily increasing the bet over the past few months.

Shares of Occidental retreated 18% over the past month as oil prices dropped on rising recession fears.

— Yun Li

Lucid Group and AMD both fell around 6% to lead the tech-heavy Nasdaq 100 index lower. At one point on the day ET, just three of the index's 100 components traded higher: Kraft Heinz, Astrazeneca and Okta.

Thursday's losses put the Nasdaq 100 on pace for its biggest one-month loss since June, down about 9%. It's also on track for its first three-quarter decline since 2002.

—Fred Imbert, Gina Francolla

Roughly 2,690 New York Stock Exchange-listed stocks fell Thursday, while just 260 names advanced. Put another way, about 10 stocks fell for every advancer at the NYSE.

—Fred Imbert

Cathie Wood's Ark Innovation ETF slumped more than 5% on Thursday morning amid a broad market sell-off.

Pacific Biosciences, down more than 7% and Coinbase, off by roughly 9%, are among the names dragging the ETF. Tech companies, like the constituents in ARKK, are especially sensitive to rising interest rates.

ARKK is off by nearly 10% for the month, and it's down 60% in 2022.

— Darla Mercado, Gina Francolla

The iShares Mortgage Real Estate Capped ETF (REM) slumped more than 5% on Thursday morning, notching a fresh low going back to May 2020. The fund is on pace for its worst month since March 2020, tumbling 25% in September.

The declines come about as mortgage rates continue to skyrocket and the Federal Reserve continues its rate-hiking campaign. The average interest rate on a 30-year fixed loan is now 6.70%, according to fresh data from Freddie Mac. That's up from 6.29% a week ago. Home prices have also begun to slow down as borrowing costs become prohibitively expensive.

-Darla Mercado, Gina Francolla

Stock futures extended losses after jobless claims data hit a five-month low despite the Federal Reserve's efforts to slow the labor market.

Futures tied to the Dow Jones Industrial Average dropped 324 points, or 1.09%. S&P 500 and Nasdaq 100 futures declined 1.32% and 1.63%, respectively.

Jobless claims for the week ended Sept. 24 totaled 193,000, according to the Labor Department on Thursday. The figure was lower than the prior week's adjusted 209,000 and below the 215,000 Dow Jones estimate.

It's the lowest level in claims since April and the first time claims fell below 200,000 since early May.

— Sarah Min, Jeff Cox

AllianceBernstein says extremely poor investor sentiment could point to a short-term buying opportunity, pointing to its Composite Sentiment Indicator (CSI) that triggered a buy signal.

The signal came ahead of four positive weeks more than 70% of the time over the past 22 years, according to the firm.

"We consider this signal as a potential short term tactical buying opportunity but remain cautious on equities over a medium term horizon," the firm's Mark Diver wrote in a Thursday note.

Stocks on Wednesday bounced back from the year's bear market lows, but the firm remains wary that the one-day rally points to a broader uptrend.

"To be clear, we are not saying that the multitude of risks currently driving equity valuations lower are now in the price and that the 2022 bear market is over," Diver wrote. "Rather we are saying that investor sentiment has now reached such negative levels that in the short term (i.e. over the next 4 weeks) the probability of global equities making positive returns is greater than generating negative returns at this juncture."

— Sarah Min

Correction: A previous version of this post misattributed a quote to AllianceBernstein.

CarMax shares tumbled 15.5% in premarket trading Thursday after the used car dealer reported declining sales volume that came in below analyst expectations.

Sales were down 2.9% for the three-month period ending August 31 compared to the same timeframe a year prior. Earnings per share dropped to $0.79, a 54.1% decrease from $1.72 a year ago. Analysts surveyed by Refinitiv were expecting around $1.39 in earnings per share.

CarMax purchased about 8.1% fewer vehicles from consumers and dealers. But net revenue growth was 2% higher than it was a year ago, as the company pointed to increasing profit per sold vehicle despite market-wide depreciation.

— Alex Harring

Apple shares dipped more than 2% after Bank of America downgraded the tech giant to neutral from buy and slashed its price target on the stock.

"Shares have outperformed significantly YTD (AAPL down 16%, S15INFT down 29%) and have been perceived as a relative safe haven," Wamsi Mohan wrote in a Thursday note. "However, we see risk to this outperformance over the next year, as we expect material negative est. revisions driven by weaker consumer demand."

CNBC Pro subscribers can read more here.

— Carmen Reinicke

Analysts at Wells Fargo initiated Coinbase with an underweight, citing rising macroeconomic pressures among other potential negative catalysts.

"Though we believe in the value of COIN's platform, we see its early-mover advantages gradually being eroded away as the competition increasingly mimics the COIN ecosystem," analyst Jeff Cantwell wrote in a Thursday note.

CNBC Pro subscribers can read the full story here.

— Carmen Reinicke

European stocks fell on Thursday as the initial reprieve after the Bank of England stepped in to calm the markets seemingly faded.

The pan-European Stoxx 600 fell 1.7% in early trade, with retail stocks dropping 4% to lead losses as all sectors and major bourses slid into negative territory.

Sterling has stooped to record lows against the U.S. dollar in recent days, and slid once again on Thursday morning, shedding 1% against the greenback to trade at around $1.078.

- Elliot Smith

The 10-year yield inched back up to 3.848% after dropping 25 basis points, or the most since 2020 overnight in the U.S.

The yields on the 5-year Treasury note and the 7-year Treasury note were up — as high as 4.085% and 3.986% respectively.

The yield on the policy-sensitive 2-year Treasury touched 4.227%.

Yields and prices have an inverted relationship. One basis point is equivalent to 0.01%.

— Jihye Lee

Markets have largely fallen this year, but the S&P 500's oil and gas sector has advanced nearly 30%.

That's attracted investors who previously shunned the sector as the clean energy push grew in the past 10 years.

Morningstar named three funds that have turned positive towards the sector and pointed to one fund manager being "the most notable energy bull."

CNBC Pro subscribers can read more here.

— Ganesh Rao

Tech stocks have had a difficult year so far but a Rosenblatt Securities analyst thinks the sell-off is an opportunity for long-term investors to buy the dip.  

"Stay away from the losers," he said, recommending "winners in the various secular battles and evolutionary battles" in tech.

Pro subscribers can read more.

— Zavier Ong

Wells Fargo's Chris Harvey expects stocks to continue their upward move.

"The spike in short interest, retail selling skew, and BOE's action all suggest stocks will continue their oversold bounce for the next few days," he said in a note to clients Wednesday.

Stocks hit fresh lows earlier in the week, with the S&P 500 notching a new bear market. The sell-off was triggered by the Fed's latest rate decision last week, which some investors believe steered the market into oversold conditions.

As the cost of capital rises and prices hover near record highs, the consensus is increasingly coming to believe that a Fed-induced recession is unavoidable, Harvey said.

"We look at a recession like a car crash," he wrote. "You never know how bad it will be, but there is almost no 'better-than-expected' outcome — so policymakers need to be careful what they wish for."

— Samantha Subin

Just two trading days are left in September and all the major averages are on pace to cap off the month with losses.

While Wednesday's market comeback put the major averages on track for modest weekly gains, the Nasdaq Composite, Dow Industrial Averages and S&P 500 are slated to lose nearly 6% each in September.

The end of the third quarter also comes Friday, with the Dow on pace to cap its third negative quarter in a row for the first time since the third quarter of 2015. The S&P is slated to post its third consecutive negative quarter since its six-quarter losing streak that ended the first quarter of 2009. Meanwhile, the Nasdaq is on track to snap a streak of two consecutive down quarters.

Here's where the major averages stand heading into Thursday:

Dow Jones Industrial Average:

• Up 0.32% for the week
• On track to lose 5.8% this month
• Down 3.55% this quarter
• Down 18.31% this year

S&P 500

• Up 0.7% this week
• Set for a 5.97% September loss
• Down 1.75% for the quarter
• Down 21.97% this year

Nasdaq Composite:

• Up 1.69% this week
• On pace for a 6.47% September loss
• Up 0.2% for the quarter
• Down 29.36% this year

— Samantha Subin, Chris Hayes

Futures opened flat following a broad market rally during Wednesday's regular trading session. Futures tied to the Dow Jones rose 10 points, or 0.04%, while S&P 500 and Nasdaq 100 futures were flat.

— Samantha Subin