Dow Falls More Than 600 Points on Worries Over Fed, Economy - WSJ
Category: News & PoliticsVia: vic-eldred • one month ago • 12 comments
By: Caitlin Ostroff and Alexander Osipovich (WSJ)
U.S. stocks fell as traders worried about further interest-rate increases and the backdrop of a slowing economy.
The Dow Jones Industrial Average slid 1.9%, or more than 640 points, in Monday's trading. The S&P 500 dropped 2.1%, while the technology-focused Nasdaq Composite tumbled more than 2.5%.
The declines came after U.S. stocks ended last week lower, snapping a four-week stretch of gains for the S&P 500. Stocks rose from July to mid-August on hopes that inflation has started to peak , which would allow the Federal Reserve to ease up on lifting rates, as well as on generally strong corporate earnings. But Fed officials remained publicly hawkish, casting doubt on the strength of the midsummer rally.
“The market got a little ahead of itself,” said Philip Blancato, chief executive of Ladenburg Thalmann Asset Management. “The market wants the Fed to sound off on the dovish standpoint, but the Fed’s not there yet.”
Investors are awaiting comments Friday from Fed Chairman Jerome Powell, in Jackson Hole, Wyo., on the central bank’s economic outlook. Futures markets show traders are split as to whether the central bank will raise interest rates by half a percentage point or three-quarters of a point at its September meeting. Aggressive increases could cause businesses and consumers to cut back on spending, potentially hurting corporate earnings and economic growth.
“Jackson Hole is something the market is starting to get nervous about,” said Hani Redha, a portfolio manager at PineBridge Investments. After the last central-bank meeting, some investors expected that the Fed would be less aggressive on interest-rate increases as economic data worsened, he said, adding that “there is chatter that perhaps Powell will try to reverse that perception.”
The yield on the benchmark 10-year Treasury note rose to 3.035%, from 2.987% Friday. Yields and prices move inversely.
Netflix , a big beneficiary of the market’s midsummer rally, slid 6% after analysts at CFRA Research recommended that investors sell the stock.
Bed Bath & Beyond , an individual-investor favorite whose shares have been on a wild ride in recent days, tumbled nearly 16% after S&P downgraded the retailer’s credit rating.
Bitcoin , the world’s largest cryptocurrency by market value, slipped 1.1% from its 5 p.m. ET level Sunday to trade at about $21,277. The digital currency briefly broke below $21,000 earlier Monday. Crypto prices are heavily influenced by sentiment, causing selling in times of broad market selloffs.
Major stock indexes in Europe weakened, with the pan-continental Stoxx Europe 600 closing 1% lower, led by losses in German, Italian and French stocks.
Natural-gas prices shot higher in Europe, spurred by worries that a planned closure of the Nord Stream pipeline by Russia will prevent the continent from amassing sufficient fuel supplies before winter. Benchmark European gas prices jumped 13% to settle at 276.75 euros a megawatt-hour.
Stocks in Asia closed mostly lower, with the exception of China’s Shanghai Composite. The index gained 0.6% after banks in China cut benchmark interest rates on loans to households and businesses.