Wall Street stocks fell on Monday, with the S&P 500 suffering its biggest drop in more than two months. Federal Reserve Chairman Jerome H. Powell’s speech this week struck investors on the avenue of interest. rate for the coming months.
The benchmark index fell 2.1%, its steepest daily drop since June 16th. The technology-heavy Nasdaq Composite Index fell 2.5% on him, nearly erasing its gains in August.
Stock markets have reversed some of the recent rally, fueled by a string of better-than-expected corporate earnings reports and reports that inflation eased in July. Monday’s drop follows a small drop last week and his fourth consecutive week of gains that pushed the S&P 500 up more than 17%.
The sudden volatility shows that investors realize they’re not out of the woods yet with the Fed, with sharp inflation pains and the Fed’s string of big rate hikes this year leading to a sharp drop in stocks. It reminds me that I pushed the Inflation in July, which showed consumer price gains steady from the previous month, spurred hopes that the central bank might ease its campaign to raise borrowing costs.
But it has become clear to investors that such conclusions are premature, said Victoria Green, chief investment officer at G Squared Private Wealth.
Inflation FAQ
Inflation FAQ
What is inflation? Inflation is the loss of purchasing power over time. So your dollar won’t go as well tomorrow as it did today. This is usually expressed as annual fluctuations in the prices of commodities and services such as food, furniture, clothing, transportation, and toys.
“People are coming back to the reality that the world is still a very uncertain place,” she said.
Powell’s speech at a gathering of central bankers in Jackson Hole, Wyoming, on Friday could help clarify the Fed’s inflation expectations. Economists will listen for clues as to whether the Fed will raise interest rates by another quarter of a quarter at his September meeting, he will raise rates by 3 points, or he will raise rates by 0.5 points.
Monday’s trading reflected concerns that policymakers would opt for a more aggressive approach. Significant increases in borrowing costs help keep inflation in check by slowing the economy, but they also make it harder for businesses to grow and more expensive for consumers to borrow and spend.
on monday, Investigation A survey by the National Association of Business Economists found that nearly three-quarters of business economists were skeptical that the Fed could hit its 2% inflation target over the next two years without triggering a recession. Fifty-two percent of respondents said they were “not very confident” in the Fed’s handling of inflation, while 21 percent said they were “not at all confident.”
“What worries me is that the Federal Reserve is doing everything in its power now to remind people to keep raising rates,” Green said.
Some central bank policy makers this month suggested the Fed remains determined to keep inflation under control and is likely to continue pushing up borrowing costs until it does.
Understanding Inflation and How It Affects You
Monday’s pessimistic mood also affected other markets. Yields on government bonds rose, with yields on 10-year Treasury bills above 3% for the first time since July 20. The two-year yield jumped him to 3.32%.
The price of Bitcoin, the largest cryptocurrency, fell by more than 2% to $21,084. Cryptocurrencies are down more than 54% year-to-date.
In Europe, the Stoxx 600 is down nearly 1% and the overall index is down more than 22% year-to-date. The decline comes after Russia’s state-owned energy company Gazprom announced that it would suspend production of the Nord Stream 1 pipeline, the main supplier of natural gas to Europe, for three days from the start of its operation, after European natural gas prices fell to his lowest level. It happened because the price soared by more than 14%. August 31st.
Selling continued in Asia on Tuesday, with Tokyo’s Nikkei 225 down 1.1% and Hong Kong’s Hang Seng down 0.5% by noon. Stocks in Australia, South Korea and Taiwan also fell. The outlier in the region was the Shanghai stock index, which rose after China planned to cut interest rates to bolster the country’s property sector.
Vivek Shankar contributed to the report.