US stocks fell on Monday as investors worried about spiraling inflation and geopolitical tensions.
The S&P 500 fell in morning trade to enter what the market considers a “correction” – a drop of 10% or more from its recent high. The stock index is down nearly 11% from its January 4 high.
Extending its losing streak, the Dow plunged more than 1,000 points Monday morning, or nearly 3%, to 33,256, down about 10% from its Jan. 4 high.
The heavy Nasdaq Composite Index plunged 4.4% on Monday, extending its recent streak of losses from its November high to nearly 18% — a number approaching the 20% decline that defines a “bear” market.
Investors have been increasingly concerned about how strong the Federal Reserve, which is holding its policy meeting this week, may act this year to cool rising inflation. consumer, the largest increase in nearly 40 years.
Wall Street is anticipating the Fed’s first rate hike as early as March, and investors are increasingly concerned that the Fed will have to raise rates more quickly and more often than the central bank originally indicated.
The Fed’s standard short-term interest rate currently ranges from 0% to 0.25%. Investors now see a nearly 70% chance that the Federal Reserve will raise the rate by at least one full percentage point by the end of the year, according to CME Group’s Fed Watch.
Federal policy makers will release their latest statement on Wednesday.
“The path of rate hikes will critically depend on the future pace of inflation and the intersection with wage growth,” Kathy Bostancik, chief US financial economist at Oxford Economics, said in a note.
Inflation puts pressure on businesses and consumers as demand for goods continues to exceed supplies. Companies warn that supply chain problems and rising raw material costs could hamper their finances. Retailers, food producers and others have raised commodity prices to try to offset the effect.
Rising costs are raising concerns that consumers will start spending less due to the ongoing pressure on their wallets.
Sarah Johnson, CEO of IHS Markit, expects inflation and the withdrawal of fiscal and monetary policy stimulus to affect the economy. The research firm on Monday forecast growth in gross domestic product – the total value of products and services – to slow to 4.1% in 2022, from 5.7% last year. By contrast, the United States could get a boost amid indications that the infection rate of the COVID-19 virus associated with the Amicron variant is declining in some parts of the country.
On Monday, the energy and raw materials sectors led the markets declines. Technology stocks were among the heaviest weights in the market as investors shifted their money away from higher-priced stocks in anticipation of higher interest rates. High rates make shares in high-tech airlines and other expensive growth stocks relatively less attractive.
Tensions escalate between Russia andIt’s also causing turmoil on Wall Street. The State Department has ordered the families of US Embassy employees in Kiev, Ukraine to do so Some US government employees were authorized to leave due to the possibility of Russian military action.
Decisions were made out of extreme caution due toA senior US State Department official said the disinformation and disinformation campaigns. Russia is a major oil producer, and experts warn that a major disruption to the country’s supply on the global market could drive up energy prices in the United States.
On Ukraine’s borders, although the United States does not know if Russian President Vladimir Putin made a decision to invade or if a decision was imminent, he built up the military capacity to invade at any time, one official said.