Stocks fall broadly on Wall Street, extending market losses
Another broad stock market sell-off Monday deepened Wall Street’s losses from last week, leaving the Standard & Poor’s 500 index with its biggest slide since mid-June.
The benchmark index fell 2.1%, nearly doubling its losses from last week, when it broke a four-week winning streak. The Dow Jones industrial average slumped 1.9% and the Nasdaq composite dropped 2.5%.
Technology companies and retailers had some of the heaviest losses. Smaller-company stocks also lost ground, pulling the Russell 2000 index 2.1% lower.
The latest market slide comes as investors grapple with uncertainty over when the highest inflation in decades will ease significantly, how much the Federal Reserve will have to raise interest rates to get it under control and how much the rate hikes will slow the economy.
Wall Street will be looking for insight into these unknowns later this week, when the Federal Reserve holds its annual meeting in Jackson Hole, Wyo.
“Volatility spiked as investors are increasingly nervous about what they might hear from officials at the Fed’s upcoming Jackson Hole symposium,” said Jeffrey Roach, chief economist for LPL Financial.
Most analysts say the report for July suggests the rate of inflation has peaked and will gradually decline from its 40-year high.
The S&P 500 fell 90.49 points to 4,137.99. The Dow lost 643.13 points to close at 33,063.61, while the Nasdaq fell 323.64 points to 12,381.57. The Russell 2000 gave up 41.60 points to end at 1,915.74.
Some 95% of the stocks in the S&P 500 fell. Technology companies, retailers, banks and communications services stocks accounted for a big share of the index’s slide.
Microsoft fell 2.9% and Target fell 3%. JPMorgan dropped 1.7% and Netflix slid 6.1%.
Movie theater operators also fell in choppy trading after news that Cineworld is considering filing for Chapter 11 bankruptcy protection. The industry is still struggling to recover from the COVID-19 pandemic. AMC Entertainment fell 5.5% and Cinemark fell 5.8%.
Bright spots in the market included Signify Health, which jumped 32.1% after the Wall Street Journal reported that Amazon would bid for the company.
Bond yields gained ground. The yield on the 10-year Treasury, which influences rates on home mortgages and other loans, rose to 3.03% from 2.97% late Friday.
The broader market’s losses come on the heels of a weeks-long rally. Investors are trying to figure out where the economy goes from here because stubbornly hot inflation hurts businesses and consumers.
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Record-high inflation also has investors focusing on central banks and their efforts to fight high prices without further damaging economic growth.
“You’ve had quite a rally and there’s reason to not be sure where we’re going from here,” said Tom Martin, senior portfolio manager with Globalt Investments. “There’s still decent potential for a recession.”
Minutes last week from the Federal Reserve’s July board meeting affirmed plans for more rate hikes despite signs of weaker economic activity. Traders worry that aggressive steps to slow the economy might go too far and bring on a recession.
The U.S. economy has already contracted through the first half of 2022, and Wall Street will get more information Thursday when the government releases an updated report on the U.S. economy for the second quarter.
Investors are also looking ahead to this week’s Federal Reserve conference for signals about more possible U.S. rate hikes to cool surging inflation. Fed Chair Jerome H. Powell is scheduled to give a speech Friday morning at the central bank’s annual meeting in Jackson Hole, which starts Thursday.
In the last decade, the two largest race discrimination cases brought by the federal government in the Golden State alleged widespread abuse of hundreds of Black employees at Inland Empire warehouses.
The Fed is holding its meeting after a heavy week of company and economic data that showed inflation is still squeezing the economy but consumer spending remains resilient.
Falling gasoline and food commodity prices for wheat and corn have helped relieve some of that pressure. That helped essentially stall inflation’s advance in July, though prices still remain stubbornly 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.”
