The S&P 500 was down 0.3% at 10:23 a.m. ET. About 70% of the benchmark stocks lost ground. It overcomes the biggest one-day and weekly declines since mid-June. The Dow Jones industrial average fell 141 points, or 0.4 percent, to 32,134 and the Nasdaq fell 0.2 percent. Technology stocks were among the biggest weights in the market. Apple fell 0.7%. Healthcare stocks also fell sharply. Drug delivery technology company Catalent fell 8.8% after giving investors a disappointing revenue forecast. Energy stocks posted gains as U.S. crude oil prices rose 2.6%. Exxon Mobil rose 3.4%. The yield on the 10-year note rose to 3.10 percent from 3.03 percent late Friday. Inflation, its impact on the economy and the Fed’s battle plan remain front and center on Wall Street. Last week, the central bank said it would raise interest rates next year as it tries to stifle demand and lower prices for goods and services. The Fed’s last two hikes were by 0.75 basis points, and Wall Street expects a third such increase in September, according to CME Group. Some investors had hoped the Fed would ease rate hikes next year if inflation eased. That sentiment led to a rally in stocks in July and early August. Investors are watching economic reports closely to get a better sense of how much the economy is slowing and whether inflation is starting to ease from the hottest levels in four decades. The Fed’s preferred inflation gauge slowed last month, while other data showed consumer spending slowed. Wall Street will get several more economic updates this week. The US federal government will release its closely watched monthly jobs report on Friday. The labor market remained resilient amid a broader economic slowdown. This helped ease concerns that the US was facing a possible recession. Federal Reserve Chairman Jerome Powell speaks during a news conference in Washington on July 27. On Friday, Powell said the Fed would likely impose bigger rate hikes in the coming months to tame record inflation. (Manuel Balce Ceneta/The Associated Press) The message from Federal Reserve Chairman Jerome Powell in a speech on Friday was expected, although some had hoped it would be less emphatic. “The market was obviously looking for something a little more neutral. After all the talk of a ‘pause’ and a ‘pivot,’ none of it made sense with a Fed that has repeatedly said it will keep rates hiking even if it means some economic pain, we’re back to Square 1 with an outlook for the Fed to continue to tighten,” said Clifford Bennett, chief economist at ACY Securities. “The Fed was always going to continue raising rates aggressively, but the market decided to slow the hikes, even a reversal.”
Global stocks were hit by the Fed speech
A person stands in front of an electronic stock board showing Japan’s Nikkei 225 index at a securities firm on Monday in Tokyo. Asian stocks fell on Monday after the head of the US Federal Reserve said high interest rates would continue for some time to curb inflation. (Eugene Hoshiko/The Associated Press) European markets were also lower and Asian markets closed lower overnight. Chinese economic data showing a drop in industrial profits showed that a strong recovery there will take time amid new COVID-19 restrictions. Japan’s benchmark Nikkei 225 fell 2.7 percent to end at 27,878.96. Australia’s S&P/ASX 200 fell two percent to 6,965.50. South Korea’s Kospi fell 2.2 percent to 2,426.89. Hong Kong’s Hang Seng fell 0.7 percent to 20,023.22, while the Shanghai Composite recovered earlier losses to rise 0.1 percent to 3,240.73. “Risk-on sentiment is also on display in today’s Asian session as bearish sentiment follows the sell-off on Wall Street ending last week, while US futures continue to suggest no reprieve for the new week” , said Yeap Jun. Rong, market strategist at IG in Singapore. Powell spoke last week at an annual economic symposium in Jackson Hole, Wyo., which has been the setting for market-moving Fed speeches in the past. He said the Fed would likely need to keep interest rates high enough to slow the economy “for some time” in order to reverse the high inflation sweeping the country. The Fed has already raised its key overnight rate four times this year in hopes of slowing the worst inflation in decades. Higher interest rates help herd inflation, but they also hurt asset prices. Powell acknowledged that the hikes would hurt US households and businesses, perhaps in an unspoken nod to the possibility of a recession. But he also said the pain would be much greater if inflation was allowed to subside and that “we have to keep it until the job is done”. In energy trading, benchmark U.S. crude rose 13 cents to $93.19 a barrel. Brent crude, the international standard, added 11 cents to $99.12 a barrel.
