U.S. stocks fell as traders worried about further aggressive interest-rate increases and a slowing economic backdrop.
The S&P 500 dropped 1.6% in Monday trading. The technology-focused Nasdaq Composite tumbled 1.9% and the Dow Jones Industrial Average fell 1.3%, or more than 400 points. The declines came after U.S. stocks ended last week lower, snapping a four-week stretch of gains for the S&P 500.
Investors are awaiting comments Friday from Federal Reserve Chairman
in Jackson Hole, Wyo., on the central bank’s economic outlook. While the Fed has raised borrowing costs this year in an effort to tame inflation and signaled more increases are to come, some investors believe inflation has started to peak.
Futures bets show traders are split as to whether the central bank will raise interest rates by a half percentage point or three-quarter percentage 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 moved to 3.026%, up from 2.987% Friday. Yields and prices move inversely.
Bitcoin, the world’s largest cryptocurrency by market value, slipped 0.4% from its 5 p.m. ET level Sunday to trade at $21,431. 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.
In commodities, futures on benchmark Brent crude oil slipped 1.1% to $95.62 a barrel. Softening global demand and prospects for an Iran nuclear deal that could lead to more Iranian oil hitting global markets have weighed on prices in recent sessions.
Major stock indexes in Europe weakened, with the pan-continental Stoxx Europe 600 down 1%, 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 275.5 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.
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8