Wall Street Stock Selloff Extends Losses on Recession Fears

First modification: 08/23/2022 – 03:57

Wall Street fell 1.91% this Monday, in its worst day since mid-June, with investors concerned about further increases in interest rates by the United States Federal Reserve and the effect that this may have on the economy.

The Dow Jones dropped 643.13 points, to 33,063.61 integers, while the selective S&P 500 fell 2.14% or 90.49 units, to 4,137.99 points. The Nasdaq, where the main technology companies are listed, fell 2.55% or 323.64 integers, to 12,381.57 units.

The falls on Wall Street ended a good run last week, in which they had accumulated four consecutive weeks of gains, thus recovering part of what was lost in the first half of the year.

Investors are wondering when the highest inflation in decades will slow down significantly, how much the Federal Reserve will have to raise interest rates to control inflation and how much rate hikes will slow the economy.

Many answers will come by the end of the week, when the Federal Reserve holds its annual meeting in Jackson Hole, Wyoming.

The continued rise in rates, on the Fed’s agenda

“Volatility has spiked as investors are increasingly nervous about what they may hear from officials at the upcoming Fed symposium in Jackson Hole,” said Jeffrey Roach, chief economist at LPL Financial.

So far, from the latest messages that have been released by the US central bank, it is clear that it will be necessary to continue raising interest rates, something that increases the uncertainty of investors, who fear the effect that a high price of money can have on economic growth.

The technology giants had a bad day, with setbacks for Microsoft (-2.94%), Apple (-2.30%), Amazon (-3.62%), Meta (-2.92%) or Alphabet (- 2.53%). Movie theater operators also fell into turbulent trading after learning that ‘Cineworld’ is considering filing for bankruptcy protection.

Bond yields gained ground. The 10-year Treasury yield, which influences rates on mortgages and other loans, rose to 3.03% from 2.97% on Friday.

The Fed will meet later to hear business and economic data that showed inflation continues to put pressure on the economy, although consumer spending remains resilient. Falling prices for gasoline and commodities such as wheat and corn have helped ease some of that pressure.

With EFE and AP