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Wall Street ends sharply lower on fears of aggressive Fed

Stock Markets Aug 22, 2022 07:06PM ET
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2/2 © Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 17, 2022. REUTERS/Brendan McDermid/File Photo 2/2
 
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By Noel Randewich and Bansari Mayur Kamdar

(Reuters) - Wall Street ended sharply lower on Monday as investors fretted about a U.S. Federal Reserve gathering later this week in Jackson Hole, Wyoming, that is expected to reinforce a strong commitment by the central bank to stamp out inflation.

All 11 S&P 500 sector indexes declined, led lower by consumer discretionary, down 2.84%, followed by a 2.78% loss in information technology.

Nvidia (NASDAQ:NVDA) Corp dropped 4.6% and Amazon.com Inc (NASDAQ:AMZN) fell 3.6%, while Microsoft Corp (NASDAQ:MSFT) and Apple Inc (NASDAQ:AAPL) each lost more than 2% as the benchmark 10-year U.S. Treasury yield rose to its highest since July 21. [US/]

Technology and other higher-growth stocks often fall when bond yields rise.

After a summer rally on Wall Street ended last week, the S&P 500 remains down about 13% so far in 2022, and the Nasdaq is down more than 20%.

The CBOE Volatility index, Wall Street's fear gauge, rose to 23.9, its highest in over two weeks.

Focus is on Fed Chair Jerome Powell's speech on Friday at the central banking conference in Jackson Hole for further cues on how aggressively the Fed is likely to be with future interest rate hikes.

"Powell is going to try to sound hawkish to tamp down inflationary expectations and tighten financial conditions. So that's most likely going to be a negative catalyst for the market," warned Jay Hatfield, chief investment officer at Infrastructure Capital Management in New York.

The Fed will probably raise interest rates by 50 basis points in September, according to economists polled by Reuters.

However, traders are split between a 50 bps hike and a 75 bps hike by the central bank after several policymakers recently pushed back against expectations of a dovish pivot and emphasized the Fed's commitment to fight against inflation. [FEDWATCH]

Investors will also be looking for details on the Fed's plans to reduce its nearly $9 trillion balance sheet, a process that started in June.

The S&P 500 declined 2.14% to end the session at 4,137.99 points.

The Nasdaq declined 2.55% to 12,381.57 points, while Dow Jones Industrial Average declined 1.91% to 33,063.61 points.

Slowdown fears hit markets globally. China's central bank trimmed some key lending rates on Monday in a bid to support a slowing economy and a stressed housing sector.

Also bleeding into negative sentiment on Wall Street, European shares dropped after Russia's Gazprom (MCX:GAZP) said last week it would halt natural gas supplies to Europe for three days at the end of August.

AMC Entertainment (NYSE:AMC) Holdings Inc tumbled 42% after the cinema chain's preferred stock listing started trading and its UK-based rival Cineworld Group warned of a possible bankruptcy filing.

Signify Health Inc surged 32% following a report on Sunday that UnitedHealth Group Inc (NYSE:UNH), Amazon, CVS Health Corp (NYSE:CVS) and Option Care Health (NASDAQ:OPCH) Inc were bidding to acquire the company.

Declining stocks outnumbered rising ones within the S&P 500 by a 19.9-to-one ratio.

The S&P 500 posted one new high and 32 new lows; the Nasdaq recorded 30 new highs and 171 new lows.

Volume on U.S. exchanges was relatively light, with 9.9 billion shares traded, compared with an average of 10.8 billion shares over the previous 20 sessions.

Wall Street ends sharply lower on fears of aggressive Fed
 

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Comments (39)
Kerry Ditto
Kerry Ditto Aug 22, 2022 9:37PM ET
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fed chair's power is too much. fed should be replaced by a stable computer program authorized by US Congrss
Jay Garrelts
Jay Garrelts Aug 22, 2022 9:37PM ET
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Crooked lawmakers and computer programs are the problem lol
Kerry Ditto
Kerry Ditto Aug 22, 2022 9:37PM ET
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Jay Garrelts Tinking with interest rates is not a good idea according to Milton Friedman.
Jay Garrelts
Jay Garrelts Aug 22, 2022 9:37PM ET
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Kerry Ditto the petro dollar is not a good idea either
Brad Albright
Brad Albright Aug 22, 2022 9:37PM ET
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Of course, none of the armchair economists will ever do the day after day, year after year work it takes to become a real economist and rise to a position where their notions can actually have some influence. Easier to shuffle back and forth between internet comments and Call of Duty.
Brad Albright
Brad Albright Aug 22, 2022 9:37PM ET
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Of course, none of the armchair economists will ever do the day after day, year after year work it takes to become a real economist and rise to a position where their notions can actually have some influence. Easier to shuffle back and forth between internet comments and Call of Duty.
jamie
jamie Aug 22, 2022 7:35PM ET
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FR fr fr. FR didn't give fear nor hope. Only market cheered with groundless. whatever Powell says, market should understand economy not by his words literaly but by common sense. Otherwise market can make mistake again. Powell is born to dove but anyway FR will do their job.
Marco cuevas
Marco cuevas Aug 22, 2022 7:13PM ET
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Its feast or famine for nedge fjnds managing miney for the biggest pension funds in America...they have been pumping the market fkr tne last 2 months taking you along for tne ride...now tney are dumping and costing you millions.
Marco cuevas
Marco cuevas Aug 22, 2022 4:05PM ET
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Headline should be PUMP AND DUMP because all wallstreet is doing is taking profits your profits.
First Last
First Last Aug 22, 2022 4:05PM ET
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I took profit today.   You can call me Wallstreet from now on.
Benjamin USA
Benjamin USA Aug 22, 2022 2:27PM ET
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Just like Trump, the Fed will grab the market by the …..
Mike Chang
Mike Chang Aug 22, 2022 2:10PM ET
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Garbage news. When stock surges there is no fear and when stock tumbles there is fear.
First Last
First Last Aug 22, 2022 2:10PM ET
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You expected otherwise?
Stan Smith
Stan Smith Aug 22, 2022 2:09PM ET
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Last week Inflation was turning the corner...and there was no concern of an aggressive FED. Some stock pumper was telling fibs!
First Last
First Last Aug 22, 2022 2:09PM ET
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Things change in the markets.  Keep up or stay out.
Ryan Lennon
Ryan Lennon Aug 22, 2022 2:09PM ET
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"things change in the markets..." are you joking? most obvious statement of the year.
First Last
First Last Aug 22, 2022 2:09PM ET
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Ryan Lennon   But it was not obvious to Stan.
Stan Smith
Stan Smith Aug 22, 2022 2:09PM ET
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First Last  lol...you're a more on
Alan Rice
Alan Rice Aug 22, 2022 2:07PM ET
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(What goes around,....,...)
Sandeep Khese
Sandeep Khese Aug 22, 2022 2:07PM ET
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how much time market is reacting on this news ...dont know. some time it is said that market is already discounted this..... I think big money plays game with retailers by spreading this kind of news
Dominic Mazoch
Dominic Mazoch Aug 22, 2022 1:57PM ET
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If a company needs cash at a low interest rate, there is a way to bypass the FED. Sell shares you bought back. issue new ones. George Jetson simple.
 
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