‘It’s Clearly Bleak’: Stocks Notch Longest Losing Streak in Months

A rally at the start of the year has given way to worries on Wall Street about economics and geopolitics.

Stocks suffered their longest losing streak of the year, as geopolitical turmoil rattled Wall Street and investors slashed their bets on the Federal Reserve cutting interest rates any time soon.

The S&P 500 fell 0.9 percent on Friday, its sixth consecutive decline, marking its worst run since October 2022.

The slide dragged the S&P 500 down by just over 3 percent for the week, a third straight weekly decline. By that measure, it is the longest weekly losing streak for the index since September, when concerns over rising government debt and a potential government shutdown compounded worries about the effects of high interest rates.

Those fears dissipated toward the end of last year as inflation cooled and investors began to bet that the Fed would soon cut rates, prompting a ferocious stock rally in the first three months of 2024.

But this month, worries that stubborn inflation would lead the Fed to keep rates high have returned, compounded by the widening conflict in the Middle East, with Israel striking Iran early on Friday.

“It’s clearly bleak,” said Andrew Brenner, head of international fixed income at National Alliance Securities.

Investors have pulled roughly $21 billion out of funds that invest in U.S. stocks over the two weeks through Wednesday, according to data from EPFR Global, which tracks fund flows. That compares to an inflow of around $80 billion for the year through early April. And the unease is not just apparent in the stock market.

U.S. government bond yields, which underpin interest rates for a wide variety of loans, have been rising. The average rate on 30-year mortgages, the most popular home loan in the United States, rose above 7 percent on Thursday for the first time this year.

The dollar is also markedly higher, putting pressure on countries that import goods from the United States and issue dollar-denominated debt. And oil prices, stoked by geopolitical tensions, are up more than 13 percent since the start of the year.

“There is nothing that looks good right now,” Mr. Brenner said.

Recent reports showing hotter-than-expected inflation have altered investors’ forecasts for the Fed, which has kept its key rate near a two-decade high. “The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Jerome H. Powell, the Fed chair, said at an event in Washington on Tuesday.

Economists at Société Générale no longer expect the Fed to cut rates this year. BNP Paribas and Wells Fargo economists have also dialed down their expectations for cuts.

Traders in futures markets, which allow investors to bet on where interest rates are headed, are wagering on one, and perhaps two, quarter-point cuts by the end of the year. At the start of the year, traders were expecting six cuts over that period.

At first, the shift appeared to be welcomed by stock investors. A strong economy, all else equal, is good for the stock market, and while some inflation data had started to buck the trend earlier this year it wasn’t enough to disrupt the broader cooling that took hold in 2023. But recent inflation reports have continued to disappointed investors and economists and become harder to ignore.

John Williams, the president of the New York Fed, said this week that it was possible that another increase, rather than a cut, to rates might be warranted if inflation remained sticky, even if that wasn’t what he considered the most likely scenario. Other officials have noted that the Fed may have to wait until much later this year, or even 2025, to begin easing rates.

So far, worries have yet to intensify to the point of threatening the strength of the U.S. economy. Although the S&P 500 has fallen 5.5 percent this month, it remains more than 4 percent higher for the year.

And a recent survey of fund managers around the world by Bank of America showed the most optimism since January 2022, with respondents expecting global growth to accelerate. The biggest risk, according to the respondents, is a rise in inflation that could keep interest rates elevated, squeezing growth abroad and at home.

 Dubai flooding hobbles major airport's operations as "historic weather event" brings torrential rains to UAE

Dubai, United Arab Emirates — The desert nation of the United Arab Emirates attempted to dry out Wednesday from the heaviest rain ever recorded there after a deluge flooded out Dubai International Airport, disrupting travel through the world's busiest airfield for international travel. The state-run WAM news agency called the rain Tuesday "a historic weather event" that surpassed "anything documented since the start of data collection in 1949." 

The rains began late Monday, soaking the sands and roadways of Dubai with some 0.79 inches of rain, according to meteorological data collected at Dubai International Airport. The storms intensified around 9 a.m. local time Tuesday and continued throughout the day, dumping more rain and hail onto the overwhelmed city.

Flooding impacts Dubai International Airport

By the end of Tuesday, more than 5.59 inches of rainfall had soaked Dubai over 24 hours. An average year sees just 3.73 inches of rain fall at Dubai International Airport, a hub for the long-haul carrier Emirates.

At the airport, standing water lapped on taxiways as aircraft landed. Arrivals were halted Tuesday night and passengers struggled to reach terminals through the floodwater covering surrounding roads.

TOPSHOT-UAE-BAHRAIN-OMAN-WEATHER-FLOOD 
Motorisits drive along a flooded street following heavy rains in Dubai, early on April 17, 2024.

The airport said in a series of social media posts that all operations were halted for about 25 minutes on Tuesday afternoon and that all arrivals would be diverted after that "until the weather conditions improve." Late Wednesday morning, the airport and the flagship carrier Emirates were still warning travelers not to come to the airport unless absolutely necessary, saying all flight check-in was still suspended.

"Flights continue to be delayed and diverted. Please check your flight status directly with your airline," the airport said in a tweet. "We are working hard to recover operations as quickly as possible in very challenging conditions." 

One couple, who spoke to The Associated Press on condition of anonymity in a country with strict laws that criminalize critical speech, called the situation at the airport "absolute carnage."

"You cannot get a taxi. There's people sleeping in the Metro station. There's people sleeping in the airport," the man said Wednesday.

They ended up getting a taxi to near their home some 18 miles away, but floodwater on the road stopped them. A bystander helped them over a highway barrier with their carry-on luggage, the bottles of gin they picked up from a duty-free store clinking away.

Passengers wait at a flight connection desk at Dubai International Airport, April 17, 2024, amid flight delays and cancelations caused by flash flooding brought by a historic rain storm.

Paul Griffiths, the airport's CEO, acknowledged continued issues with flooding Wednesday morning, saying every place an aircraft could be safely parked was taken. Some aircraft had been diverted to Al Maktoum International Airport at Dubai World Central, the city-state's second airfield.

"It remains an incredibly challenging time. In living memory, I don't think anyone has ever seen conditions like it," Griffiths told the state-owned talk radio station Dubai Eye. "We are in uncharted territory, but I can assure everyone we are working as hard as we possibly can to make sure our customers and staff are looked after."

Did "cloud-seeding" contribute?

Rain also fell in Bahrain, Oman, Qatar and Saudi Arabia. However, the rains were acute across the UAE. One reason may have been "cloud seeding," in which small planes flown by the government go through clouds burning special salt flares. Those flares can increase precipitation.

Several reports quoted meteorologists at the National Center for Meteorology as saying they flew six or seven cloud-seeding flights before the rains. The center did not immediately respond to questions Wednesday, though flight-tracking data analyzed by the AP showed one aircraft affiliated with the UAE's cloud-seeding efforts flew around the country Sunday.

The UAE, which relies heavily on energy-hungry desalination plants to provide water, conducts cloud seeding in part to increase its dwindling, limited groundwater.

Flooding closes schools across UAE

Schools across the UAE, a federation of seven sheikhdoms, largely shut ahead of the storm and government employees were largely working remotely if they could. Many workers stayed home as well, though some ventured out, with the unfortunate ones stalling out their vehicles in deeper-than-expected water covering some roads.

Cars are seen on a flooded street during a rainstorm in Dubai, United Arab Emirates, April 16, 2024.

Authorities sent tanker trucks out into the streets and highways to pump away the water. Water poured into some homes, forcing people to bail out their houses.

The country's hereditary rulers offered no overall damage or injury information for the nation, as some people slept in their flooded vehicles Tuesday night. In Ras al-Khaimah, the country's northernmost emirate, police said a 70-year-old man died when his vehicle was swept away by floodwater.

Fujairah, an emirate on the UAE's eastern coast, saw the heaviest rainfall Tuesday with 5.7 inches falling there.

Authorities canceled school and the government instituted remote work again for Wednesday.

Rain is unusual in the UAE, an arid, Arabian Peninsula nation, but occurs periodically during the cooler winter months. Many roads and other areas lack drainage given the lack of regular rainfall, causing flooding.

Meanwhile in neighboring Oman, a sultanate that rests on the eastern edge of the Arabian Peninsula, at least 19 people were killed in heavy rains in recent days, according to a statement Wednesday from the country's National Committee for Emergency Management. That includes some 10 schoolchildren swept away in a vehicle with an adult, prompting condolences from rulers across the region.