Stocks sink Fed fears, currency turmoil continues

US stocks extended losses in another back-and-forth session on Monday, with stocks bracing for more turmoil this week. Fears of excessive Fed tightening and Runaway in the currency markets rattle investors.

The S&P 500 is down about 1% in the afternoon, while the Dow Jones Industrial Average is down about the same percentage, or a loss of 300 points. The high-tech Nasdaq Composite Index is down 0.4% after erasing gains of more than 1%. Meanwhile, the CBOE volatility index (^ VIX), which measures Wall Street’s expectations of short-term market volatility, rose above 31, the highest since June 17.

Moves come after a Brutal selling bout Driven by rising expectations that central bank policymakers could cause a recession as they raise interest rates to fight decades-old high inflation.

on me FridayThe Dow Jones Industrial Average hit its lowest level in 2022 after posting a 4% loss for the week. The S&P 500 fell 4.6% over the same period, swinging near its June 16 low of 3666.77, closing at 3,693.23. The high-tech Nasdaq Composite Index posted a weekly loss of 5.1%.

Volatile movement was prevalent in other pockets of the market. On the bond side, the rate-sensitive 2-year Treasury rose above 4.28%, a new 15-year high, while the 10-year Treasury yield exceeded 3.82%, the highest since April 2010.

In commodities, Brent crude futures fell below $85 a barrel, the lowest since January, while the dollar index in currency markets jumped to its highest level since May 2002.

A trader works at the NYSE Stock Exchange in New York, US, on August 26, 2022. US stocks tumbled Friday with Federal Reserve Chairman Jerome Powell's tough stance against inflation and market hopes the bank will soon reverse course.  The Dow Jones Industrial Average fell 1008.38 points, or 3.03 percent, to 3,2283.40 points.  The Standard & Poor's 500 Index plunged 141.46 points, or 3.37 percent, to 4,057.66 points.  The Nasdaq Composite Index, which was dominated by technology stocks, fell 497.56 points, or 3.94 percent, to 12,141.71 points.  (Xinhua Photo via Getty Images)

A trader works at the NYSE in New York, US, on August 26, 2022. US stocks tumbled Friday as Federal Reserve Chairman Jerome Powell’s tough anti-inflation stance dashed market hopes that the central bank would soon reverse course. a path. The Dow Jones Industrial Average fell 1008.38 points, or 3.03 percent, to 3,2283.40 points. The Standard & Poor’s 500 Index plunged 141.46 points, or 3.37 percent, to 4,057.66 points. The Nasdaq Composite Index, which was dominated by technology stocks, fell 497.56 points, or 3.94 percent, to 12,141.71 points. (Xinhua Photo via Getty Images)

Transatlantic volatility was also in focus to start the week after a rollercoaster move by the British pound. The The currency is down about 4% to about $1.03, hitting an all-time low against the US dollar, after the new British government announced plans to issue its biggest tax cut in 50 years and boost spending. The pound stabilized, rising again to $1.07.

“What is worrying is that not only will balloon borrowing to eye-catching levels, but the inflation fires will be further ignited with this tax credit, which provides higher-income earners with an even greater tax cut,” Susanna Streeter, senior investment and markets analyst said. in a note.

Back in the US, some Wall Street strategists predict a recession is the base scenario for the Federal Reserve as it goes on a campaign to raise interest rates in a bid to restore price stability – especially after President Jerome Powell’s persistence. Beware of economic “pain”. In a speech last week.

However, the President of the Federal Reserve in Atlanta, Rafael Bostic, still believes that he and his colleagues can reduce inflation without significantly harming the labor market, according to the His remarks in an interview Sunday On CBS “Face the Nation”.

“I think we will do everything we can at the Fed to avoid deep, deep pain,” Bostick said. “We’re still creating a lot of jobs on a monthly basis, and so I actually think there’s some capacity for the economy to absorb our measures.”

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed

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