What a rout!  Today, with both China trimming its lending rates and Russia announcing it will cut off natural gas to Europe for three days next week, global slowdown fears mounted and investors became increasingly concerned that the Fed will turn more hawkish at the meeting in Jackson Hole this Friday. So it was a straight shot down, major hits in the triple digits.  This of course means that if the news out of Jackson Hole turns out to be not quite so dire, there will likely be a big rally Friday.  But it’s a long time until Friday and who knows how much more fear will pollute the markets between now and then. The S&P is still down 13% for the year, the Nasdaq 20. Both the S&P and the Nasdaq declined 2.1% and 2.5% respectively just today, the Dow 1.9.  The good news is that volume was light at 9.9 billion, meaning everyone is on the fence waiting for better news. 

Mon  August 22, 2022  4:23 PM

Wall Street ends sharply lower on fears of aggressive Fed

By Noel Randewich and Bansari Mayur Kamdar

DJ: 33,706.74  -292.30         NAS: 12,705.22  -260.13        S&P: 4,228.48  -55.26      8/19

DJ: 33,063.61  -643.13         NAS: 12,381.57  -323.64        S&P: 4,137.99  -90.49      8/22

Aug 22 (Reuters) - Wall Street ended sharply lower on Monday as investors fretted about a U.S. Federal Reserve gathering later this week in Jackson Hole, Wyoming, that is expected to reinforce a strong commitment by the central bank to stamp out inflation.  All 11 S&P 500 sector indexes declined, led lower by consumer discretionary (.SPLRCD), down 2.84%, followed by a 2.78% loss in information technology (.SPLRCT).  Nvidia Corp (NVDA.O) dropped 4.6% and Amazon.com Inc (AMZN.O) fell 3.6%, while Microsoft Corp (MSFT.O) and Apple Inc (AAPL.O) each lost more than 2% as the benchmark 10-year U.S. Treasury yield rose to its highest since July 21.  Technology and other higher-growth stocks often fall when bond yields rise.

After a summer rally on Wall Street ended last week, the S&P 500 (.SPX) remains down about 13% so far in 2022, and the Nasdaq (.IXIC) is down more than 20%.  The CBOE Volatility index (.VIX), Wall Street's fear gauge, rose to 23.9, its highest in over two weeks.

Focus is on Fed Chair Jerome Powell's speech on Friday at the central banking conference in Jackson Hole for further cues on how aggressively the Fed is likely to be with future interest rate hikes.  "Powell is going to try to sound hawkish to tamp down inflationary expectations and tighten financial conditions. So that's most likely going to be a negative catalyst for the market," warned Jay Hatfield, chief investment officer at Infrastructure Capital Management in New York.

The Fed will probably raise interest rates by 50 basis points in September, according to economists polled by Reuters. read more  However, traders are split between a 50 bps hike and a 75 bps hike by the central bank after several policymakers recently pushed back against expectations of a dovish pivot and emphasized the Fed's commitment to fight against inflation. FEDWATCH  Investors will also be looking for details on the Fed's plans to reduce its nearly $9 trillion balance sheet, a process that started in June. read more

The S&P 500 declined 2.14% to end the session at 4,137.99 points.  The Nasdaq declined 2.55% to 12,381.57 points, while Dow Jones Industrial Average declined 1.91% to 33,063.61 points.

Slowdown fears hit markets globally. China's central bank trimmed some key lending rates on Monday in a bid to support a slowing economy and a stressed housing sector. read more  Also bleeding into negative sentiment on Wall Street, European shares dropped after Russia's Gazprom (GAZP.MM) said last week it would halt natural gas supplies to Europe for three days at the end of August. read more 

 

AMC Entertainment Holdings Inc (AMC.N) tumbled 42% after the cinema chain's preferred stock listing started trading and its UK-based rival Cineworld Group (CINE.L) warned of a possible bankruptcy filing. read more  Signify Health Inc (SGFY.N) surged 32% following a report on Sunday that UnitedHealth Group Inc (UNH.N), Amazon, CVS Health Corp (CVS.N) and Option Care Health Inc (OPCH.O) were bidding to acquire the company. read more 

 

Declining stocks outnumbered rising ones within the S&P 500 (.AD.SPX) by a 19.9-to-one ratio.  The S&P 500 posted one new high and 32 new lows; the Nasdaq recorded 30 new highs and 171 new lows.

Volume on U.S. exchanges was relatively light, with 9.9 billion shares traded, compared with an average of 10.8 billion shares over the previous 20 sessions.