News Tech: The losses on Wall Street from the previous week were further exacerbated by a widespread stock market sell-off on Monday, resulting in the S&P 500’s largest decline since mid-June.
The losses were particularly severe for retailers and technology industries. Stocks of smaller companies fell as well, pushing the Russell 2000 index down 2.1%.
The benchmark index dropped 2.1%, almost double its losses from the previous week when it snapped a four-week gain streak. The Nasdaq fell 2.5%, while the Dow Jones Industrial Average lost 1.9%.
The recent market decline coincides with investors’ anxiety over when the greatest inflation in decades will considerably decline, how much more interest rates would need to be raised by the Federal Reserve to bring it under control, and how much the rate increases will slow the economy.
The S&P 500’s stocks dropped by over 95%. A significant portion of the index’s decline was attributed to equities in technology firms, merchants, banks, and communications services. Target dropped 3%, while Microsoft slid 2.9%. JPMorgan fell 1.7%, while Netflix fell 6.1%.
Following the announcement that Cineworld is considering applying for Chapter 11 bankruptcy protection, theatre operators also experienced a decline in turbulent trading. Recovery from the viral epidemic is still proving difficult for the sector. AMC Entertainment dropped 5.5%, while Cinemark dropped 5.8%. The Wall Street Journal stated that Amazon will make an offer for Signify Health, and this was one of the market’s bright spots. Signify Health’s stock increased 32.1% as a result.
Bond yields increased. The yield on the 10-year Treasury, which affects mortgage and other lending rates, increased to 3.03% late Friday from 2.97%. Losses in the larger market follow a rise that lasted for many weeks. Investors are attempting to predict the direction of the economy as persistently high inflation harms both firms and consumers. Investors are concentrating on central banks’ efforts to combat excessive prices without further impeding economic development as a result of record-high inflation.
Tom Martin, senior portfolio manager at Globalt Investments, said: “You’ve got quite a rise and there’s reason to not be sure where we’re heading from here.” “A recession still has a good chance of happening.”
Following a busy week of business and economic statistics that revealed inflation is still straining the economy but consumer spending is resiliant, the Fed is having its meeting. Falling gas costs and the cost of food commodities like wheat and corn have relieved some of that stress. The rise in inflation was basically stopped in July as a result, yet prices are still persistently high. “I don’t think we’re out of the woods yet on inflation,” Martin said. “We still don’t really know how inflation is going to pan out and what the Fed is going to do.”
Investors are also anticipating this week’s Federal Reserve meeting for clues about potential future rate increases by the United States to curb soaring inflation. At the Federal Reserve’s annual conference in Jackson Hole, which begins on Thursday, Fed Chair Jerome Powell is expected to deliver a speech on Friday morning. The Federal Reserve’s July board meeting minutes, released last week, confirmed intentions for more rate increases despite indications of a slowing economy. Traders are concerned that forceful measures to slow the economy might become excessive and trigger a recession. When the government delivers an updated report on the U.S. economy for the second quarter on Thursday, Wall Street will learn more about how much the U.S. economy has already shrunk during the first half of 2022.