Wall Street’s losses worsen as markets around the world fall

NEW YORK (AP) – Wall Street falls to its lowest point in more than a year on Monday as renewed concerns about China’s economy pile up in a market already hit by rising interest rates.

The S&P 500 was 2.1% lower in afternoon trading after coming out of its fifth losing week in a row, the longest series in more than a decade. It joined a worldwide fad for markets on Monday. Not only did stocks fall across Europe and large parts of Asia, but so did everything from old economic crude oil to bitcoin with new economies.

The Dow Jones Industrial Average was down 392 points, or 1[ads1].2%, to 32,538 at 12:31 pm Eastern time, and the Nasdaq composite was 2.7% lower as technology-oriented stocks again took the brunt of sales. Monday’s sharp fall means that the S&P 500, Wall Street’s most important health goal, is down about 16% from the record set early this year.

Most of this year’s damage has been the result of the Federal Reserve’s aggressive flip away from doing everything it can to support the financial markets and the economy. The central bank has already deducted short-term key interest rates from a record low of zero, where it was sitting during almost the entire pandemic. Last week, it signaled further increases of twice the usual amount may come in the coming months, hoping to stop the high inflation sweeping over the economy.

The designs will slow down the economy by making it more expensive to borrow. The risk is that the Fed could cause a recession if it moves too far or too fast. Meanwhile, higher interest rates discourage investors from paying very high prices for investments, because investors can get more than before from owning super-hedge government bonds instead.

This has contributed to a fall of about 29% for bitcoin since the beginning of April, for example. It fell 5% on Monday. Concerns about the world’s second largest economy contributed to the gloom on Monday. Analysts at the weekend quoted comments from a Chinese official who warned of a serious situation for jobs, as the country hopes to stop the spread of COVID-19.

The authorities in Shanghai have again tightened the restrictionsamong residents who murmured that it feels endless, just when the city came out of a month of severe blockade after an eruption.

The fear is that China’s strict anti-COVID policy will disrupt global trade and supply chains, while at the same time dragging on the economy, which for years was a major driver of global growth.

In the past, Wall Street has been able to remain stable despite similar pressure due to the strong profit growth that the companies produced.

But this past earnings reporting season for large U.S. companies has given less enthusiasm. Overall, the companies report larger profits for the last quarter than expected, as is usually the case. But disappointing signs of future growth have been abundant.

The number of companies citing “weak demand” in their conference calls for earnings reports jumped to the highest level since the second quarter of 2020, strategist Savita Subramanian wrote in a BofA Global Research report. The technology revenues are also lagging behind, she said.

The technology sector is the largest in the S&P 500 by market value, which gives it extra weight for market movements. Many technology-oriented companies saw a boom in profits during the pandemic as people looked for new ways to work and entertain themselves while locked up at home. But the decline in their profit growth makes their stocks vulnerable after their prices shot so high at expectations of a continued rise.

The higher interest rates developed by the Fed also hit their share prices particularly hard because they are seen as some of the most expensive on the market. The Nasdaq composite’s loss of around 25% for 2022 so far is much sharper than for other indices.

The electric car manufacturer Rivian Automotive fell 17.1% on Monday when restrictions expire which prevented some large investors from selling their shares after the stock exchange debut six months ago. It has lost more than three quarters of its value so far this year.

The yield on the 10-year Treasury has shot to the highest level since 2018 as inflation and expectations of the Fed action rose. It moderated on Monday and fell to 3.08% from 3.12% late Friday. But it is still more than double the level of 1.51% where it started the year.

In the Asian stock markets, the Japanese Nikkei 225 fell 2.5%, and South Korea’s Kospi lost 1.3%. Shares in Shanghai rose 0.1 percent.

In Europe, France’s CAC 40 fell 2.8% and Germany’s DAX lost 2.1%. London’s FTSE 100 fell 2.3 percent.

Apart from concerns about inflation and coronavirus restrictions, the war in Ukraine is still a major cause of uncertainty. More than 60 people were feared dead after a Russian bomb exploded at a school used as a shelter, Ukrainian officials said. Moscow is stepping up pressure on its attack on defenders inside Mariupol’s steelworks in an apparent race to capture the city ahead of Russia’s victory on Monday.

Even the energy sector, a star performer in recent weeks, was under pressure on Monday. Benchmark US crude fell 4.8% to $ 104.47 a barrel, although it is still up around 40% this year. Brent oil, the international standard, fell 4.5% to $ 107.32 a barrel.


AP Business Writer Yuri Kageyama bid.

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