Wall Street’s main indices fell more than 1% at the start of the week on Monday, as investors worried about hawkish signals from policymakers at the Federal Reserve against a backdrop of slowing economic growth.
All 11 major S&P 500 sectors fell in early trade, with rates-sensitive information technology, consumer discretionary and communications services stocks falling the most.
High-growth companies such as Apple Inc. and Tesla Inc. fell 1.4% and 2.4%, respectively.
A four-week summer rally for the Nasdaq and the S&P 500 broke after growth stocks tumbled last week, as the benchmark 10-year Treasury yield tumbled nearly 3% on fears of inflation.
Banks fell 2.1% on Monday, with lenders JPMorgan Chase & Co and Bank of America down nearly 2%.
Banking giants collectively face regulatory fines of more than $1 billion for employees’ use of disapproved messaging tools, including email and apps like WhatsApp.
The CBOE Volatility Index, Wall Street’s fear gauge, rose to 23.26, its highest level in two weeks.
Expectations of a dovish pivot by the Fed and strong quarterly earnings helped the benchmark S&P 500 rebound about 14.5% from mid-June after the start of the year.
The focus this week is on Fed Chair Jerome Powell’s speech at a central banking conference in Jackson Hole on Friday for further indications on the way to tighten monetary policy.
“Markets reassured themselves that last month the CPI suggested inflation had peaked … but that was short-sighted,” said Kenny Polkari, managing partner at Case Capital Advisors.
“Jackson Hole will give Powell an opportunity to reset the narrative and suggest that the Fed is going to remain cautious and aggressive.”
According to economists surveyed by Reuters, the Fed will increase rates by 50 basis points (bps) in September.
Traders also expect a slightly higher chance of a 50 bps hike from a third 75 bps hike, even as several policymakers have pushed against expectations of a weaker pivot and stressed the fight against inflation. Is.
Investors will be looking for details of the Fed’s plan to shrink its nearly $9 trillion balance sheet, a process that began in June.
The Fed’s preferred inflation gauge, the PCE Price Index, will also be released this week.
Investors eager for clues about the economy’s strength amid rising fears of a recession will also closely track flash readings on business activity, second-quarter GDP estimates and the University of Michigan’s consumer sentiment.
At 09:39 am, the Dow Jones Industrial Average was down 397.64 points, or 1.18%, at 33,309.10, the S&P 500 was down 59.65 points, or 1.41%, at 4,168.83 and the Nasdaq Composite was down 212.19 points, or 1.67. %, at 12,493.03.
Fears of recession also knocked in the global markets. China’s central bank cut some key lending rates on Monday to support a slowing economy and a stressed housing sector.
Signify Health Inc jumped 37.8% on Sunday after a report that UnitedHealth Group Inc, Amazon.com Inc, CVS Health Corp and Option Care Health Inc were bidding to acquire the company.
AMC Entertainment Holdings Inc. declined 36.6% after the US cinema chain’s preferred stock listing began trading and its UK-based rival Cineworld Group warned of a potential bankruptcy filing.
There has been an increase in the number of issues declining to an 8.41-to-1 ratio on the NYSE and to a 4.21-to-1 ratio on the Nasdaq.
The S&P index recorded a new 52-week high and 29 new lows, while the Nasdaq recorded 13 new highs and 78 new lows.
This story has been published without modification in text from a wire agency feed.
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