The most pronounced market sell-off in recent years showed no signs of easing on Monday, with U.S. stock indexes slipping to new lows for 2022, and other assets, such as oil and bitcoin, also fell.
Few believe that a recession is inevitable. The labor market continued to rapidly create jobs. Wages are rising and the unemployment rate remains close to the 50-year low. But economists say there is a growing likelihood of a slowdown in the coming year, and respondents to The Wall Street Journal estimate a 28% chance of a recession sometime in the next 12 months – up more than 18% in January.
The outlook for the global economy is also increasingly bleak, investors say. Supply chains have already been worried about this year. Maps in China aimed at curbing the spread of Covid-19 and the Russian war against Ukraine have heightened fears about how growth will persist in the rest of the world. Faced with so much uncertainty, it is no wonder that markets have been as volatile as they have been over the past few weeks, investors say.
“The days of the market crash are just beginning,” said Andy Kapyrin, an investment associate at RegentAtlantic, a registered investment adviser based in New Jersey and New York City.
The S&P 500 fell 132.10 points, or 3.2%, to 3,991.24, adding to losses after breaking its longest weekly decline since 2011. Monday was the first time the index has closed below 4,000 since March 2021. The Nasmbled had 4151 points, or 4.3%, to 11,623.25, and the Dow Jones Industrial Average fell 653.67 points, or 2%, to 3,2245.70.
Later this week, investors will get another reading on inflation when the Bureau of Labor Statistics publishes its consumer price index. Economists expect the data to show that inflation fell from the level in March, which marked the highest level in four decades.
Any surprise upward could spur new volatility in the markets, analysts say. Investors were initially relieved last week when the Fed, which raised interest rates by half a percentage point, said it was not looking at larger rate increases. That feeling soon gave way to anxiety as investors grappled with the reality that the Fed could be forced to reconsider its plans if inflation fails to ease in the coming months.
“The market doesn’t know how high the Fed has to go to control inflation, and we have a sense of global slowdown,” said Sebastien Galy, macro strategist at Nordea Asset Management. “There are a lot of negative things happening in the market.”
Sales hit most of the S&P 500 sector on Monday. Shares of everything from manufacturers through banks to even energy producers, a relatively bright spot this year, ended the day lower.
Mata’s Facebook platform fell $ 7.56, or 3.7%, to $ 196.21, while Amazon.com lost $ 119.57, or 5.2%, to $ 2,175.78, and Apple lost $ 5.75. $ 22, or 3.3%, to $ 152.06. Technology stocks have been particularly hard hit by this year’s sales as rising rates have made many investors reluctant to invest in parts of the market that look expensive.
Industrial stocks were also affected. Investors tend to view the group as an economic leader, as its profits are particularly sensitive to changes in growth prospects. Caterpillar fell $ 8.36, or 3.9%, to $ 206.29, and Boeing lost $ 15.59, or 10.5%, to $ 133.31.
Even parts of the market that held up relatively well this year retreated on Monday.
The energy sector S&P 500 fell 8.3%, the biggest one-day decline since June 2020.
Energy stocks have jumped in recent months along with oil prices. But recently, some retailers have begun to worry that blockades to curb the spread of Covid-19 in China will reduce global demand for the goods. That encouraged the gathering a little. U.S. crude fell 6.1% to $ 103.09, the worst day since March.
Meanwhile, the sale of cryptocurrencies accelerated, so the price of bitcoin dropped to around $ 30,000. Bitcoin, along with other cryptocurrencies, has jumped in recent years as the lowest interest rates have encouraged investors to look for riskier markets with potentially higher returns.
The sharp rise in interest rates this year has halted that growth. Now, investors say they are forced to reconsider the attractiveness of many trades that have flourished in an environment of low rates and low growth.
Yield on reference 10-year treasury bills was at 3,080% on Monday, compared to 3.124% on Friday. The ten-year yield, which is rising as bond prices fall, has risen by almost 1.6 percentage points since the end of 2021.
Overseas, the pan-continental Stoxx Europe 600 fell 2.9% in its fourth consecutive fall session. Monday marked the worst day of the index since March.
In Asia, Japan’s Nikkei 225 fell 2.5%, while Australia’s S & P / ASX 200 fell 1.2%.
China’s CSI 300 index, which tracks the largest companies listed in Shanghai or Shenzhen, fell 0.8%. Markets in Hong Kong were closed due to a national holiday.
Corrections and reinforcements
The Dow closed at its lowest level since March 2021. An earlier version of this article incorrectly stated that the Dow Jones industry average ended at its lowest level since November 2020. (Corrected May 9th).
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