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On The Money — Why the stock market selloff has no end in sight

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Stocks have fallen hard this year and experts say we may not be close to the bottom. We’ll also look at why House Republicans are pushing to stop a government funding bill and a push to bolster the nation’s food security. 

But first, keep track of the latest news about Hurricane Ian as it makes landfall in Florida. 

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.

How low could stocks go? 

In the midst of a bear market and with the Federal Reserve expected to hike interest rates even further, leading Wall Street analysts are eyeing one question with increasing concern: Just how much further could stocks fall?  

The precise answer is impossible to predict, but experts told The Hill they expect investors to see more pain before growth in the economy resumes.  

“Based on our client discussions, a majority of equity investors have adopted the view that a hard landing scenario is inevitable and their focus is on the timing, magnitude, and duration of a potential recession and investment strategies for that outlook,” Goldman Sachs analysts David Kostin and Ben Snider wrote in a note to investors last week.  

The context: Major stock indices have now entered a bear market, indicating a drop of 20 percent from recent highs.  

  • The Dow Jones Industrial Average of major U.S. companies fell more than
    300 points Monday to close at 29,260, down 20.5 percent from a January high of 36,800.  
  • The S&P 500 is down almost 24 percent on the year from nearly 4,800 in January.  
  • The technology-heavy Nasdaq index has lost more than 30 percent of its value over the same period, hurting from the higher debt levels its companies hold that make them particularly vulnerable to interest rate hikes. 

The Hill’s Tobias Burns breaks it down here

FUNDING TROUBLE

House GOP calls for ‘no’ vote on CR 

House Republican leadership is urging its members to oppose a stopgap funding bill to avoid a shutdown in Washington. 

Minority Whip Steve Scalise (R-La.) sent a memo to House GOP offices Tuesday night recommending that members vote against the continuing resolution (CR), which would keep the government funded at last year’s fiscal levels until Dec. 16. 

  • In its memo, GOP leadership encouraged members of the conference to vote “no” on the CR as a rebuke for Democrats allegedly not negotiating with Republicans on key issues, including inflation, the border and the opioid crisis. 
  • They also took issue with the length of the CR — the Dec. 16 expiration date gives the Democratic House majority an opportunity to craft a funding plan during the lame-duck session after Election Day. 

The Hill’s Mychael Schnell explains here. 

FARM BILL LOOMS

Widespread push for sustainability gains traction ahead of next farm bill 

A push to restore rapidly degrading soil and bolster the nation’s food security is gaining traction — and it could affect how the U.S. produces food for the next half-decade and beyond.  

Advocates for the effort are ramping up pressure on lawmakers who are weighing whether to use next year’s farm bill, which will dictate agricultural policy through at least 2028, to boost incentives for farming practices that regenerate soil and reduce emissions or stick with the status quo.  

  • Activists say that if Congress doesn’t take action to reverse soil erosion, yields will decrease and the nation will gradually lose viable farmland.  
  • Lawmakers want to expand resources to help farmers counter that problem by implementing cover cropping, no-till farming and other sustainable practices. 

“If we do not listen … about the urgency of regenerative farming and dealing with the source of our food, which is our soil, we will have a food shortage in this country,” Rep. David Scott (D-Ga.), chairman of the House Agriculture Committee, said at a recent hearing. 

Karl has the details here

OIL AND TROUBLE

Biden warns oil and gas industry not to hike energy prices over Hurricane Ian 

President Biden warned U.S. energy companies against using the impacts of Hurricane Ian to hike gas prices in remarks Wednesday morning.  

“Do not use this as an excuse to raise gasoline prices or gouge the American people,” Biden said at the White House Conference on Hunger, Nutrition and Health. “The price of oil has stayed relatively low and kept going down; the price of gas should be going down as well.”   

  • Analysis by Patrick De Haan of GasBuddy Tuesday night indicated that about 20 percent of gas stations in Tampa, where the storm is projected to hit, are without fuel. 
  • However, De Haan said average prices throughout the Sunshine State are holding steady, as the storm has not affected Gulf of Mexico refinery operations overall. Those operations are not in the storm’s forecasted path as of Wednesday morning. But, should the storm veer west, it could threaten refining operations off Louisiana and Texas. 

The Hill’s Zack Budryk has more here

Good to Know

The Biden administration on Wednesday hosted a conference on hunger, nutrition and health, the first such conference the White House has hosted in more than
50 years. 

Speaking at the Ronald Reagan Building and International Trade Center, President Biden called for the U.S. to build on the measures passed under his administration meant to improve financial security for families, such as the expanded child tax credit and the Inflation Reduction Act. 

Here’s what else we have our eye on: 

  • European Union officials pledged a “robust and united response” to any deliberate disruption of the bloc’s energy infrastructure, a day after two Russian gas pipelines ruptured in the Baltic Sea. 
  • More than a million Floridians have been left without power as Hurricane Ian made landfall in Florida as a Category 4 storm, according to poweroutage.us. 
  • The United States will give Ukraine 18 more advanced rocket systems as part of a new $1.1 billion military aid package to the country, Pentagon officials announced Wednesday. 

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow. 

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