Stocks fell sharply in followingnoon trading on Wall Street on Monday, extending market losses amid concerns regarding inflation and the road ahead for the economy.
The S&P 500 lost 2.1% on Monday, its biggest drop since mid-June.. 95% of benchmark stocks lost ground. Last week ended in the red, breaking a four-week winning streak.
Meanwhile, the Dow Jones gave in 1,9%the Nasdaq it fell 2.5 percent. Tech companies and retailers suffered some of the biggest losses. Signify Health soared following The Wall Street Journal reported that Amazon was going to bid for the company. Investors are watching the Federal Reserve conference this week.
The main indices showed a strong decline: the Dow Jones lost 1.9%, the Nasdaq fell 2.5% and the S&P 500 finished 2.1% lower.
Cinema operators showed up volatile following learning that Cineworld is considering filing for Chapter 11 bankruptcy. The sector is still struggling to recover from the virus pandemic.
Among the bright spots in the market is Signify Healthwhich soared 32.2% following The Wall Street Journal reported that Amazon was going to bid for the company.
Bond yields gained ground. The 10-year Treasury yield rose to 3.03% from 2.97% on Friday.
Market losses generally come following a multi-week rally. Investors are trying to figure out where is the economy going, as persistently high inflation hurts businesses and consumers. Record inflation has also caused investors to focus on central banks and their efforts to combat high prices without further damaging economic growth.
“We’ve had a big climb and there are reasons to be unsure where we’re going”said Tom Martin, portfolio manager at Globalt Investments. “There is still a decent potential for a recession.”
Last week’s minutes from the Fed’s July meeting affirmed plans for more rate hikes despite signs of weaker economic activity. Traders are concerned that aggressive measures to slow the economy will go too far and cause a recession. The US economy has already contracted in the first half of 2022 and Wall Street will get more information on Thursday when the government releases an updated report on the US economy for the second quarter.
Investors are also watching this week’s Federal Reserve conference for signs of more possible rate hikes in the United States to cool rising inflation. The central bank holds its annual meeting in Jackson Hole, Wyoming, on Thursday. Fed Chairman Jerome Powell is scheduled to deliver a speech on Friday morning.
The Fed holds its meeting following an intense week of business and economic data that showed that inflation continues to squeeze the economy, but consumer spending remains resilient. Falling prices for gasoline and food commodities like wheat and corn have helped ease some of that pressure. This helped curb the rise in inflation in July, although prices remain stubbornly high.
“I don’t think we’re out of the woods as far as inflation is concerned,” Martin said. “We still don’t really know how inflation is going to play out and what the Fed is going to do.”
(With information from AP)
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