XPost: alt.politics.trump, talk.politics.guns, alt.politics.economics
XPost: alt.fan.rush-limbaugh
From: fjb@nytimes.com
In article
wrote:
>
> Everybody say, "THANKS DEMOCRATS!" "YOU FUCKING ASSHOLES!"
>
U.S. stocks posted their worst daily drop in two months Monday
on fears that the recent rally was based on an overly optimistic
view that the Federal Reserve would pivot away from sharply
higher interest rates to fight inflation.
How did stocks trade?
The Dow Jones Industrial Average DJIA, -1.91% closed down by
643.13 points, or 1.9%, at 33,063.61, after dropping as much as
699.11 points earlier in the day.
The S&P 500 SPX ended down by 90.49 points, or 2.1%, at 4,137.99.
The Nasdaq Composite COMP, -2.55% finished down by 323.64
points, or 2.6%, at 12,381.57.
Last week, the Dow Jones Industrial Average finished down by
54.31 points, or 0.2%, at 33,706.74. The S&P 500 closed down by
51.67 points, or 1.2%, at 4,228.48, while the Nasdaq Composite
declined 341.97 points, or 2.6%, to 12,705.22.
What drove markets?
Stocks ended Monday with chunky declines as investors expressed
wariness over a series of monetary, technical and seasonal
factors. Dow industrials and the S&P 500 had their worst drops
since June 16, while the Nasdaq Composite experienced its worst
since June 28, according to Dow Jones Market Data.
Until recent days, the benchmark S&P 500 had been rallying
sharply off its mid-June low, partly on hopes that indications
of peak inflation would allow the Fed to slow the pace of
interest rate rises and even pivot to a dovish trajectory next
year.
However, that assumption was challenged last week by a
succession of Fed officials who appeared to warn traders about
embracing a less hawkish monetary policy narrative. Central
bankers will gather this week at their annual retreat in Jackson
Hole, Wyo., and Federal Reserve Chairman Jerome Powell is
expected to deliver a highly anticipated speech on the economic
outlook.
“Markets have been too complacent to the outstanding risks to
the macroeconomic environment,” said Michael Reynolds, vice
president of investment strategy at Glenmede, which oversees $45
billion in assets from Philadelphia. “We see the risk of
recession at 50%, maybe higher than that, in the next 12 months.
Based on where we sit, the market looks a little overheated at
these valuations and we continue to be underweight equities.”
“The risk to earnings is what matters most to investors and
there’s downside risk here for markets,” Reynolds said via phone
on Monday.
Powell’s Jackson Hole speech on Friday will be a “double-edged
sword” for markets, by giving traders and investors more
certainty on the path of rates along with the need to adjust
their expectations, according to Reynolds. “Markets are
underestimating how much the Fed needs to tighten and how high
rates need to stay to bring inflation back under control. The
market needs to come to terms with how hard the Fed needs to
tighten here. Part of what we’re expecting from Jackson Hole is
for Powell to come out pretty strong and say that the Fed will
tighten even if it risks a recession. It’s a sobering message
that could lead to further risk-off moves.”
See: Here are 5 reasons that the bull run in stocks may be about
to morph back into a bear market
Falling bond yields earlier this summer had helped support
equities in their recent rally. But after dropping below 2.6% at
the start of August, the 10-year yield TMUBMUSD10Y, 3.026% moved
above 3% again on Monday.
Another issue worrying the bulls is the S&P 500’s failure to
break through a key technical level, raising fears the market
remains in a downtrend. The large-cap index had its second
consecutive loss of 1% or more on Monday, the longest such
streak since the four trading days that ended on June 13,
according to Dow Jones Market Data.
https://www.marketwatch.com/story/dow-futures-slump-around-300-
points-as-traders-question-fed-pivot-thesis-
11661160864?mod=mw_more_headlines
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