Dow Falls More Than 600 Points on Fed Worries - WSJ 2022/8/23 上午9:15

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https://www.wsj.com/articles/global-stocks-markets-dow-update-08-22-2022-11661164955

MARKETSU.S. MARKETS

Dow Falls More Than 600 Points on Fed

Worries
Investors turn jittery ahead of Fed Chairman Powell’s planned speech in
Jackson Hole

By Alexander Osipovich Follow and Caitlin Ostroff Follow

Updated Aug. 22, 2022 6:05 pm ET

Fears of additional sharp interest-rate increases by the Federal

Reserve sent the Dow Jones Industrial Average down 643 points on
Monday, taking some of the wind out of this summer’s stock-market
rally.

All three major stock indexes declined as investors looked ahead to a

Friday speech by Fed Chairman Jerome Powell in Jackson Hole,
Wyo., in which he is expected to give an update on the central bank’s
efforts to combat inflation.

Monday’s selloff came after U.S. stocks snapped a four-week stretch

of gains for the S&P 500 on Friday. The market climbed from July to
mid-August on hopes that inflation has started to peak, which would
allow the Fed to soften its stance, as well as on generally strong
corporate earnings.

But Fed officials have remained publicly hawkish, leading some

investors to conclude that the rebound was premature. The

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market’s outlook also remains highly uncertain as investors weigh

positive news—such as strong job growth—against worries that Fed
tightening could tip the economy into recession.

“The market wants the Fed to sound off on the dovish standpoint,

but the Fed’s not there yet,” said Philip Blancato, chief executive of
Ladenburg Thalmann Asset Management. “The market got a little
ahead of itself.”

The Dow fell 643.13 points, or 1.9%, to close at 33063.61 Monday. The
S&P 500 dropped 90.49, or 2.1%, to 4137.99. The technology-focused
Nasdaq Composite slid 323.64, or 2.5%, to 12381.57. Even with the
recent pullback, all three major indexes are up at least 5.8% over the
past three months.

Futures markets show traders are split as to whether the central

bank will raise interest rates by half a percentage point or three-
quarters of a point at its next meeting in September. Aggressive
increases could cause businesses and consumers to cut back on
spending, potentially hurting corporate earnings and economic
growth.

“Jackson Hole is something the market is starting to get nervous

about,” said Hani Redha, a portfolio manager at PineBridge
Investments.

After the most recent Fed meeting, some investors expected the
central bank to ease up on rate increases, Mr. Redha said. “There is

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chatter that perhaps Powell will try to reverse that perception,” he

added.

Investors are also concerned about a key number set to be released

Friday: the Commerce Department’s personal-consumption-
expenditures index, a measure of core inflation that excludes
volatile food and energy costs. The index is seen as the Fed’s
preferred measure of inflation and could impact Mr. Powell’s
calculations.

Bond yields rose Monday in a sign that traders may be anticipating

Fed rate increases. The yield on the benchmark 10-year Treasury
note rose to 3.035%, from 2.987% on Friday. Yields and prices move
in opposite directions.

The prospect of higher rates boosted the dollar, which benefits from
global money flows when it delivers higher yields than other
currencies. The WSJ Dollar Index, which measures the greenback
against a basket of 16 currencies, rose 0.5% on Monday, its seventh
consecutive day of gains.

The euro weakened, again touching parity with the dollar.

All 11 sectors of the S&P 500 fell on Monday. Tech stocks that were
flying high earlier this summer were among the worst performers.

Apple, Tesla and Microsoft all retreated more than 2%. Netflix, a big
beneficiary of the market’s midsummer rally, slid $14.62, or 6.1%, to
$226.54 after analysts at CFRA Research recommended that
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investors sell the stock.

Bed Bath & Beyond, an individual-investor favorite whose shares

have been on a wild ride in recent days, tumbled $1.79, or 16%, to
$9.24 after S&P downgraded the retailer’s credit rating.

Shares of Ford Motor fell 80 cents, or 5%, to $15.08 after a $1.7

billion jury verdict from Friday that calls into question the roof
strength of some trucks. The auto maker has said it plans to appeal.

Bitcoin, the world’s largest cryptocurrency by market value, shed

1.9% from Sunday to trade at $21,107.25. The digital currency briefly
broke below $21,000 earlier Monday. Crypto prices are heavily
influenced by sentiment, causing selling in times of broad market
selloffs.

In commodities, European natural-gas prices shot higher on worries

that an upcoming closure of the Nord Stream pipeline by Russia will
prevent the continent from amassing sufficient fuel supplies before
winter.

Benchmark European gas prices jumped 13%. U.S. natural-gas prices

rose on the prospect of increased demand from across the Atlantic,
with the main front-month futures contract climbing 3.7%.

Major stock indexes in Europe fell. The pan-continental Stoxx

Europe 600 dropped 1%, led by losses in German, Italian and French
stocks.

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Stocks in Asia closed mostly lower, with the exception of China’s

Shanghai Composite. The index gained 0.6% after banks in China cut
benchmark interest rates on loans to households and businesses.

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