Dow drops over 600 points on rate hikes, China factory slowdowns
The Dow plunged by more than 600 points Monday, extending Wall Street’s losing streak as investors took stock of rising yields on government bonds as well as economic slowdowns in China caused by the ongoing pandemic.
All three indexes hit their lowest levels of the year to date. The Dow Jones Industrial Average slipped 653.67 points, or 2%, while the S&P 500 declined by 3.5%. The Nasdaq dropped 521.41 points, or 4.3%, to 11,623.25, its lowest level since November 2020.
The market sell-off came as yields on government bonds reached new records. The 10-year Treasury note yield reached as high as 3.185% — its highest level since 2018.
The Federal Reserve is hoping to raise rates and slow the economy enough to snuff out the highest inflation in four decades, but it risks choking off growth if it goes too far or too quickly.
“Markets are digesting the start of a return to a more normal monetary policy environment,” Kristina Hooper, chief global market strategist at Invesco in New York, told Reuters.
“Moving more aggressively [on rates] raises the specter of a recession, especially with all of these complications — high inflation, Russia’s invasion of Ukraine, COVID-related supply-chain disruptions,” she said.
Facebook parent Meta Platforms fell 3.8%, while Amazon lost 5.2% and Apple shed 3.3%. Microsoft dropped 3.7% and Tesla fell 9.1%.
Technology stocks have been particularly hard hit by this year’s selling because rising rates have made some investors reluctant to put money in parts of the market that look expensive.
Industrial stocks took a hit as well. Many investors are worried that rising inflation, tightening monetary policy and continued supply-chain disruptions around the world will weigh on economically sensitive sectors. Caterpillar fell 3.9% while Boeing lost 10.5%.
A turbulent week on Wall Street ended Friday with more losses and the stock market’s fifth straight weekly decline — its longest weekly losing streak in more than a decade.
The S&P 500 ended last week with a loss of 0.6%. The Dow fell 0.3%, while the Nasdaq slid 1.4%. The Russell 2000 slid 1.7%, to 1,839.56.
In energy trading, benchmark US crude fell $7.44, to $103.09 a barrel.
With Post Wires