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Wall Street retreats as rate hike concerns persist

Economy Aug 29, 2022 06:56PM ET
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© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 22, 2022. REUTERS/Brendan McDermid
 
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By Chuck Mikolajczak

NEW YORK (Reuters) - U.S. stocks closed lower on Monday, adding to last week's sharp losses on nagging concerns about the Federal Reserve's determination to aggressively hike interest rates to fight inflation even as the economy slows.

Fed Chair Jerome Powell said on Friday the U.S. economy would need tight monetary policy "for some time" before inflation is under control, dashing hopes the Fed might pivot to more subdued rate hikes after recent data suggested price pressures were peaking.

The S&P 500 recovered from session lows that put it down 1% at the lowest in a month, but the benchmark index still notched its biggest two-day percentage decline in 2-1/2 months.

"Friday’s selloff was frankly overdone, I know (Powell) said he was going to play tough with inflation but it is honestly not that much different than what he has been saying for the last several weeks, he was a little more hawkish but I mean, geez, who is surprised by that, really?" said Randy Frederick, vice president of trading and derivatives for Charles Schwab (NYSE:SCHW) in Austin, Texas.

"I don’t see a whole lot of up or downside here in the near term, I see a lot of volatility and that is probably going to be the case at the very least until we get past the September 21 rate hike."

The Dow Jones Industrial Average fell 184.41 points, or 0.57%, to 32,098.99, the S&P 500 lost 27.05 points, or 0.67%, to 4,030.61 and the Nasdaq Composite dropped 124.04 points, or 1.02%, to 12,017.67.

Megacap technology and growth stocks such as Apple Inc (NASDAQ:AAPL), off 1.37%, and Microsoft Corp (NASDAQ:MSFT), down 1.07% were among the biggest drags on the index as Treasury yields rose.

The CBOE's volatility index, Wall Street's fear gauge, hit a seven-week high of 27.67 points.

Money market traders are pricing in a 72.5% chance of a 75-basis-point interest rate hike at the Fed's September meeting, which would be the third straight hike of that magnitude. They expect the Fed funds rate to end the year at about 3.7%.

The two-year Treasury yield, which is particularly sensitive to interest rate expectations, briefly touched a 15-year high, while the closely watched yield curve measured by the gap between two and 10-year yields remained firmly inverted.

An inversion is considered by many to be a reliable signal of a looming recession.

Economic data this week is highlighted by the August nonfarm payrolls report due on Friday. Any signs of a slowdown in the labor market might take pressure off the Fed to continue with outsized rate hikes.

The S&P 500 climbed nearly 11% since mid-June through Friday's close. It recently found support just above its 50-day moving average, although it remains well below its 200-day moving average. Despite the rebound, some investors remain worried as September approaches due to the historical weakness for stocks during the month and the anticipated hike from the Fed.

Energy stocks, up 1.54% were a bright spot as crude prices jumped about 4% on possible OPEC+ output cuts and conflict in Libya.

Bristol Myers (NYSE:BMY) Squibb slid 6.24% after its drug candidate for preventing ischemia strokes missed the main goal in a mid-stage trial.

Volume on U.S. exchanges was 9.36 billion shares, compared with the 10.59 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 2.19-to-1 ratio; on Nasdaq, a 2.20-to-1 ratio favored decliners.

The S&P 500 posted 2 new 52-week highs and 22 new lows; the Nasdaq Composite recorded 28 new highs and 199 new lows.

Wall Street retreats as rate hike concerns persist
 

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Comments (13)
S S Shet
pingo_0070 Aug 29, 2022 11:17PM ET
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still the headline saying " rate hike concerns persist .." ... what do u want , that powell should go to every individuals home and personally say that they r going to raise rates ?
Stacy Starner
Stacy Starner Aug 29, 2022 11:17PM ET
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How about take politicians pay down and have them not receive there pay after retirement fing CROOKS
Stan Smith
Stan Smith Aug 29, 2022 2:22PM ET
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Rate Hikes are a symptom. The cause is what we should be worried about!
First Last
First Last Aug 29, 2022 2:22PM ET
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Russian aggression and energy blackmail.
Stan Smith
Stan Smith Aug 29, 2022 2:22PM ET
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First Last  lol...you have a lot to learn about geopolitics and markets. The Russia Ukraine conflict is a contrived crisis acting as a scapegoat to the real crisis - Dems and their endless money printing and ridiculous social policies have caused runaway inflation and a recession. If Russia is so evil why has "America Imported Over $6 Billion In Goods From Russia Since Ukraine Invasion"? Stop drooling like an infant over CNN and do some research ...:-D
Buy And Sell
Buy And Sell Aug 29, 2022 1:17PM ET
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Stocks are going down from authumn 2022 and it will last until summer of 2025. Do not panic now. Sell before you go broke, but you have time to sell. This will last for a long time...
Casador Del Oso
Casador Del Oso Aug 29, 2022 1:17PM ET
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Given the current environment you may be right about this.
Mitchel Pioneer
Mitchel Pioneer Aug 29, 2022 1:00PM ET
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The 11AM magic show unfolds with the predictability of the rising tide, as another loss is vanquished.  When is the last time you saw the laughingstock of the investing world plunge into the red at 11AM during a "rally."  BIGGEST INVESTMENT JOKE IN THE WORLD.
Ryan Lennon
Ryan Lennon Aug 29, 2022 1:00PM ET
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dudeee. stop! no one cares.
Steven ML
Steven ML Aug 29, 2022 12:55PM ET
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Ah, we're almost back in the green. For a moment I thought reality is starting to sink in but we are back to the madness.
Ryan Lennon
Ryan Lennon Aug 29, 2022 12:55PM ET
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reality is whatever the algos deem it to be...
filipe moreira
filipe moreira Aug 29, 2022 12:44PM ET
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Powell needs to stop working for Cristine Lagarde and e EU... it is as simple as that...
Shamo Nestor
Shamo Nestor Aug 29, 2022 12:28PM ET
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Just asking,Why Russia market doing well even they’re under sanctions from the west?😡
First Last
First Last Aug 29, 2022 12:28PM ET
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Despite Russian gov't putting restrictions on people selling, the Russian stock exchange is near 5-year low.
JIM VETTER
JIM VETTER Aug 29, 2022 12:28PM ET
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China and India don't care about the conflict or the West's " sanctions. " Russia exporting all the oil they want to China and Russia. Politicians would do well to THINK before they act. The West, especially Europe, is cutting off their noses to spite their faces. Winter in Europe should be eye- opening to the lack of thoughtful leadership.
JIM VETTER
JIM VETTER Aug 29, 2022 12:28PM ET
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sorry, to China and India
Buy And Sell
Buy And Sell Aug 29, 2022 11:36AM ET
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Huge crash for stocks. Please do not panic. Please do not panic now!!!
Murali Krishna
Murali Krishna Aug 29, 2022 11:36AM ET
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This is the perfect time for Putin OPEC to reduce oil output to rub salt into the wounds and inflict further pain on stock bulls
First Last
First Last Aug 29, 2022 11:36AM ET
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Putin does like to inflict pain & chaos.
Mitchel Pioneer
Mitchel Pioneer Aug 29, 2022 11:23AM ET
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The curtain rises on the 11AM magic show.  Fraudulent, criminally manipulated, predictable joke.
Prison Mike
Prison Mike Aug 29, 2022 11:23AM ET
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The laughingstock of the financial world
First Last
First Last Aug 29, 2022 11:23AM ET
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11AM today?  Not 10 or 10:30 anymore?
 
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