- Expectations of a 75 basis point rise in June are rising
- The Wall Street “fear indicator” is up to a month high
- The S&P 500 is at its lowest level since March 2021
NEW YORK, June 13 (Reuters) – US equities fell on Monday, with the S&P 500 confirming that it is in a bearish market as fears grow that aggressive Federal Reserve interest rate hikes will push the economy in a recession.
The S&P benchmark has fallen for four consecutive days, down more than 20% from its most recent record high to confirm that a bear market began on January 3, according to a definition of regular use.
All major S&P sectors were much lower, with only about 10 components of the S&P 500 in positive territory on the day. Markets have come under pressure this year as rising prices, including a rise in oil prices due in part to the Ukraine war, have put the Fed on the path to taking strong action to tighten its policy. such as rising interest rates.
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The Fed is scheduled to make its next policy announcement on Wednesday, and investors will be very focused on any clue as to how aggressive the central bank intends to raise rates. Read more
High-growth market weights such as Apple Inc. (AAPL.O), Microsoft Corp. (MSFT.O) and Amazon.com Inc. (AMZN.O) were the main frictions of the S&P 500, as the performance of the 10-year benchmark US Treasury bill reached 3.44%, its highest level since April 2011. Growth stocks are more likely to see their gains suffer in an environment of rising rates.
A higher-than-expected reading of the Consumer Price Index (CPI) on Friday pushed traders to trade at a total of 175 basis points (bp) in interest rate hikes in September, while expectations of a 75 basis point rise at the June meeting have risen. at almost 30% from 3.1% a week ago, according to CME’s Fedwatch tool.
“The market had been trying to seize the idea that inflation has peaked, and the Fed shouldn’t be more aggressive,” said Ross Mayfield, Baird’s investment strategy analyst in Louisville, Kentucky.
“This story was broken on Friday with the CPI report, showing widespread inflation rooted everywhere.”
According to preliminary data, the S&P 500 (.SPX) lost 149.91 points, or 3.85%, to finish at 3,750.95 points, while the Nasdaq Composite (.IXIC) lost 526.82 points, or a 4.65% to 10,813.20. The Dow Jones Industrial Average (.DJI) fell 857.70 points, or 2.73%, to 30,535.09.
S&P 500 bear markets
In addition, the 10-year US Treasury bond yield curve has been briefly reversed for the first time since April, which many markets see as a reliable signal that a recession could arrive in the next year or so. two. Read more
The Nasdaq Composite Index (.IXIC), which suffered its fourth consecutive fall, confirmed that it was in bearish territory on March 7 and has fallen by about 30% this year.
The CBOE Volatility Index (.VIX), also known as the Wall Street Fear Indicator, rose to its highest level since May. However, many analysts believe that the level is low and could mean that there is more selling pressure.
“This is a market that doesn’t seem to capitulate as much as it is frustrated,” said Rob Haworth, senior investment strategist at US Bank Wealth Management in Seattle.
“Even with some of the values that have been thrown away, it is not deep enough, violent enough to see that people have taken positions.
for 2022
Actions related to cryptocurrency and the blockchain, including Riot Blockchain (RIOT.O), Marathon Digital Holdings (MARA.O) and Coinbase Global (COIN.O), plummeted as bitcoin fell further 10% after the US largest cryptocurrency lending company Celsius The network froze withdrawals and transfers citing “extreme” conditions.
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Additional report by Lewis Krauskopf, Stephen Culp and Noel Randewich; Editing by Aurora Ellis
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