Wall Street’s major indexes fell more than 1% on Monday to a dismal start to the week, as investors worried about aggressive signals from Federal Reserve policymakers against a backdrop of slowing economic growth.
All eleven major sectors of the S&P 500 were down at the open, with information technology, consumer discretionary and communications services, all interest rate sensitive, among the main losers.
High-growth companies like Apple Inc. and Tesla Inc were down 1.4% and 2.4%, respectively.
A four-week rally for the Nasdaq and S&P 500 was halted last week after growth stocks tumbled as the benchmark 10-year Treasury yield hit nearly 3% on inflation fears.
The CBOE volatility index, Wall Street’s fear gauge, rose to 23.26 on Monday, its highest level in more than two weeks.
Hopes of a less aggressive stance by the Fed and strong quarterly earnings helped the benchmark S&P 500 recovers nearly 14.5% from its mid-June lows after a rough start to the year.
This week’s focus is on Fed Chair Jerome Powell’s speech at a conference of central banks in Jackson Hole on Friday for more insight into the path of monetary policy tightening.
The Fed will raise interest rates by 50 basis points in September, according to economists polled by Reuters.
Traders also expect a slightly higher chance of a 50-bp hike rather than a third 75-bp hike, though several policymakers reacted against expectations of a less aggressive stance and emphasized fighting the inflation
Investors eager for clues about the economy’s strength amid growing fears of a recession will also closely monitor indicators on business activity, the second estimate of second-quarter GDP and a University of Michigan consumer confidence reading.
At 11:57 am (GMT), the S&P 500 index was down 1.63% to 4,159.68 points, while the Dow Jones was down 1.52% to 33,193.44 points. The Nasdaq Composite technology index fell 1.90% to 12,463.59 points. The pan-European STOXX 600 index fell 1.01% to 432.93 points.
Source: CNN Brasil
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