Stocks end September down 9.3%, worst month since March 2020

Wall Street closed out a miserable September on Friday with the S&P 500's worst monthly skid since March 2020, when the coronavirus pandemic crashed global markets.

The benchmark index ended the month with a 9.3% loss and posted its third straight losing quarter. It’s now at its lowest level since November 2020 and is down by more than a quarter since the start of the year.

The main reason financial markets continue to struggle is fear about a possible recession, as interest rates soar in hopes of beating down the high inflation that's swept the world.

“Quite frankly, if it’s a deep recession you’re going to have to see more of a sell-off," said Quincy Krosby, chief equity strategist for LPL Financial. “This is what the market is trying to navigate now."

The Federal Reserve has been at the forefront of the global campaign to slow economic growth and hurt job markets just enough to undercut inflation but not so much that it causes a recession. On Friday, the Fed’s preferred measure of inflation showed it was worse last month than economists expected. That should keep the Fed on track to keep hiking rates and hold them at high levels a while, raising the risk of it going too far and causing a downturn.

Vice Chair Lael Brainard was the latest Fed official on Friday to insist it won't pull back on rates prematurely.

“At this point, it’s not a matter of if we’ll have a recession, but what type of recession it will be,” said Sean Sun, portfolio manager at Thornburg Investment Management.

All told, the S&P 500 fell 54.85 points, or 1.5%, to close at 3,585.62 Friday, after flipping between small losses and gains in the early going. It has now posted a weekly loss in six out of the last seven weeks.

The Dow Jones Industrial Average dropped 500.10 points, or 1.7%, to...