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Wall Street closed sharply lower on Monday pulled down by large-cap tech stocks. Investor sentiment was driven by the upcoming Jackson Hole Symposium in Wyoming scheduled later for the week, where the Fed is expected to commit further on interest rate hikes. All the three major stock indexes ended in the red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) dropped 1.9% or 643.13 points to close at 33,063.61 on its worst day since Jun 16. Notably, 29 components of the 30-stock index ended in the negative territory while one remained unchanged.
The tech-heavy Nasdaq Composite finished at 12,381.57, tumbling 2.6% or 323.64 points due to the weak performance of the large-cap technology stocks.
The S&P 500 fell 2.1% or 90.49 points to end at 4,137.99. All the 11 broad sectors of the benchmark index closed in the red. The Communication Services Select Sector SPDR (XLC), the Technology Select Sector SPDR (XLK) and the Consumer Discretionary Select Sector SPDR (XLY) tanked 2.9.%, 2.8% and 2.8%, respectively.
The fear-gauge CBOE Volatility Index (VIX) increased 15.5% to 23.80. A total of 9.9 billion shares were traded Monday, lower than the last 20-session average of 10.8 billion. Decliners outnumbered advancers on the NYSE by a 4.8-to-1 ratio. On Nasdaq, a 3.47-to-1 ratio favored the declining issues.
Wall Street Weary of Upcoming Fed Meet in Jackson Hole
Late last week, concerns about a hawkish Fed resurfaced and bore down on the markets, ending a four-week winning streak. Comments coming in from various Fed officials have indicated that monetary policy tightening would continue and interest rates would continue to rise until inflation is visibly under control.
Market participants are apprehensive about the annual Jackson Hole Symposium of the Fed in Wyoming, scheduled to take place later this week. It is widely believed that the Fed would reiterate its commitment to bring inflation down by raising interest rates in future meetings, although no rate hike is expected from the Wyoming meet itself. This would not help in allaying fears about an upcoming slowdown of the economy, but would rather fuel it.
Focus remains on Fed Chair Jerome Powell's speech on Friday at the central banking conference for further cues on how aggressive the Fed is likely to be. Trade is split between a 50-basis-point and a 75-basis-point hike likely for the September meet.
Additionally, with the Fed set to let bonds mature off its $9 trillion balance sheet, it also remains to be seen whether treasury volatility picks up. The market is already suffering bouts of low liquidity. Any hint from the Fed on planned quantitative tightening would further push up bond yields.
Yields on the 2-, 10- and 30-year treasury notes climbed on Monday to their highest levels since July in apprehension of Powell’s speech, with all three settling above a 3% increase for the day comfortably. Higher yields indicate lowering prices.
Higher interest rates have an adverse effect on large-cap growth stocks like technology, because they reduce the relative value of earnings from these stocks in the future. Consequently, shares of Amazon.com, Inc. (AMZN - Free Report) and Alphabet Inc. (GOOGL - Free Report) declined 3.6% and 2.5%, respectively. Both stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
No economic data was released on Monday.
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Stock Market News for Aug 23, 2022
Wall Street closed sharply lower on Monday pulled down by large-cap tech stocks. Investor sentiment was driven by the upcoming Jackson Hole Symposium in Wyoming scheduled later for the week, where the Fed is expected to commit further on interest rate hikes. All the three major stock indexes ended in the red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) dropped 1.9% or 643.13 points to close at 33,063.61 on its worst day since Jun 16. Notably, 29 components of the 30-stock index ended in the negative territory while one remained unchanged.
The tech-heavy Nasdaq Composite finished at 12,381.57, tumbling 2.6% or 323.64 points due to the weak performance of the large-cap technology stocks.
The S&P 500 fell 2.1% or 90.49 points to end at 4,137.99. All the 11 broad sectors of the benchmark index closed in the red. The Communication Services Select Sector SPDR (XLC), the Technology Select Sector SPDR (XLK) and the Consumer Discretionary Select Sector SPDR (XLY) tanked 2.9.%, 2.8% and 2.8%, respectively.
The fear-gauge CBOE Volatility Index (VIX) increased 15.5% to 23.80. A total of 9.9 billion shares were traded Monday, lower than the last 20-session average of 10.8 billion. Decliners outnumbered advancers on the NYSE by a 4.8-to-1 ratio. On Nasdaq, a 3.47-to-1 ratio favored the declining issues.
Wall Street Weary of Upcoming Fed Meet in Jackson Hole
Late last week, concerns about a hawkish Fed resurfaced and bore down on the markets, ending a four-week winning streak. Comments coming in from various Fed officials have indicated that monetary policy tightening would continue and interest rates would continue to rise until inflation is visibly under control.
Market participants are apprehensive about the annual Jackson Hole Symposium of the Fed in Wyoming, scheduled to take place later this week. It is widely believed that the Fed would reiterate its commitment to bring inflation down by raising interest rates in future meetings, although no rate hike is expected from the Wyoming meet itself. This would not help in allaying fears about an upcoming slowdown of the economy, but would rather fuel it.
Focus remains on Fed Chair Jerome Powell's speech on Friday at the central banking conference for further cues on how aggressive the Fed is likely to be. Trade is split between a 50-basis-point and a 75-basis-point hike likely for the September meet.
Additionally, with the Fed set to let bonds mature off its $9 trillion balance sheet, it also remains to be seen whether treasury volatility picks up. The market is already suffering bouts of low liquidity. Any hint from the Fed on planned quantitative tightening would further push up bond yields.
Yields on the 2-, 10- and 30-year treasury notes climbed on Monday to their highest levels since July in apprehension of Powell’s speech, with all three settling above a 3% increase for the day comfortably. Higher yields indicate lowering prices.
Higher interest rates have an adverse effect on large-cap growth stocks like technology, because they reduce the relative value of earnings from these stocks in the future. Consequently, shares of Amazon.com, Inc. (AMZN - Free Report) and Alphabet Inc. (GOOGL - Free Report) declined 3.6% and 2.5%, respectively. Both stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
No economic data was released on Monday.