U.S. stocks ended lower on Monday after Fed chair Jerome Powell raised concerns over surging inflation and hinted at higher rate hikes in the coming months. All the three major indexes ended in negative territory but closed above their session lows.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) shed 0.6% or 201.94 points to end at 34,552.99 points after declining as much as 413 points at one point of the day and snapping its five-day winning streak. This was also the blue-chip index’s highest single day point and percentage decline since Mar 11.
The S&P 500 declined less than 0.1% or 1.94 points to finish at 4,461.18 points. Almost all the sectors except energy finished in the red.
The Real Estate Select Sector SPDR (XLRE) declined 1.1%, while the Energy Select Sector SPDR (XLY) advanced 3.1%. Nine of the 11 sectors of the benchmark index ended negative territory.
The tech-heavy Nasdaq slipped 0.4% or 55.38 points to close at 13,838.46 points, snapping its four-day winning streak.
The fear-gauge CBOE Volatility Index (VIX) was down 1.42% to 23.52. Decliners outnumbered advancers on the NYSE by a 1.50-to-1 ratio. On Nasdaq, a 1.70-to-1 ratio favored declining issues. A total of 12.82 billion shares were traded on Monday, lower than the last 20-session average of 14.65 billion.
Powell Hints at Tightening Monetary Policy
All major U.S. benchmark indexes snapped their four-day winning streak on Monday after Fed Chair Jerome Powell showed concern over rising prices and said that inflation was too high and pledged that the Fed would take necessary steps to control prices. He also hinted at more aggressive tightening of the monetary policy which could see rate hikes of half-basis point instead of the traditional quarter-percentage point move in the coming months.
This reignited fears among investors, with stocks taking a hit. Powell’s comments came less than a week after the Fed hiked interest rates by 0.25% for the first time since 2018. Tech stocks were the worst hit on Monday on concerns of growing interest rates as the 10-year Treasury yield rose over 0.15 percentage points to cross 2.3%.
However, all the three benchmarks finished above their session lows. Shares of Meta Platforms, Inc.
FB
declined 2.3%, while Microsoft Corporation
MSFT
fell 0.4%. Microsoft has a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Investors have also been worrying about the growing geopolitical tensions. On Monday, Ukraine rejected an order from Russian forces to surrender the port-city of Mariupol, as heavy bombing continued to rock major Ukrainian cities including capital Kyiv. This has also been impacting the markets.
No major economic data was released on Monday.
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