Wall Street locked in a downward trajectory

Wall Street failed to fight back after Friday’s slide, with investors remaining mired in worries about the impact on the economy of the Federal Reserve’s aggressive campaign to tame inflation.

Indexes were in free fall on Friday, with the Dow Jones down 1,008.38 points, or 3%, to close at 32,283.40 after Fed Chairman Jerome Powell’s tough message on inflation in his economic conference speech of the bank in Jackson Hole, Wyoming. The broader S&P 500 lost 3.4% to 4,057.66, while the tech-heavy Nasdaq plunged 3.9% to 12,141.71.

The selloff followed Powell’s warning that the central bank would continue its efforts to rein in inflation even if it meant more “pain” for households and businesses. These statements dashed investors’ hopes for milder rate hikes from the Fed in the coming period.

“Reducing inflation is expected to require a prolonged period of below-normal growth,” Powell said in his speech. “Higher interest rates, slower growth and weaker labor market conditions will reduce inflation, but will also bring some pain to households and businesses,” he stressed.

Indicators – Statistics

On the board, the Dow Jones lost 184.41 points, or -0.57%, to close at 32,098.99, while the S&P 500 fell 27.05 points, or -0.67%, to 4,030.61. The tech Nasdaq fell 124.04 points, or -1.02%, to 12,017.67.

Of the 30 stocks that make up the Dow Jones industrial index, only five closed with a positive sign and 25 with a negative. Walmart gained $1.35, or 1.03%, to $132.95, the biggest gainer, followed by Chevron, up 0.75%, to $164.64, and Boeing, up 0.53 % to $165.40

The biggest losers were Salesforce (-3.04%), 3M (-2.04%) and Merck & Co (-1.88%).

Markets now see a 65% chance the Fed will raise interest rates by 75 basis points at its next meeting in September, up from about 57% before Powell’s speech.

Meanwhile, U.S. Treasury yields are rising, with the 10-year yield climbing as high as 3.13 percent and the two-year yield strengthening to its highest level since 2007 at 3.489 percent before paring gains.

But in Europe, yields are also strengthening, with the German 10-year bond climbing up to 1.5% in the wake of aggressive statements by European Central Bank officials about the need to step up efforts to curb inflationary pressures.

Austrian Robert Holzmann and Dutch Klaas Knot floated the possibility of a 75 basis point rate hike at the next meeting in September, while Executive Committee member Isabel Schnabel warned that the risk of inflation expectations being derailed was now too high. .