cloudyn.png
Wednesday August 17th, 2022 7:29AM

Wall Street joins worldwide swoon on rate, China worries

By The Associated Press
Related Articles
  Contact Editor

NEW YORK (AP) — Wall Street is tumbling toward its lowest point in more than a year on Monday as renewed worries about China’s economy pile on top of markets already battered by rising interest rates.

The S&P 500 was 2.2% lower in morning trading after coming off its fifth straight losing week, its longest such streak in more than a decade. It joined a worldwide swoon for markets Monday. Not only did stocks fall across Europe and much of Asia, but so did everything from old-economy crude oil to new-economy bitcoin.

The Dow Jones Industrial Average was down 487 points, or 1.5%, at 32,412, as of 10:30 a.m. Eastern time, and the Nasdaq composite was 3.1% lower. Monday’s sharp drop leaves the S&P 500, Wall Street’s main measure of health, down nearly 16% from its record set earlier this year.

Most of this year’s damage has been the result of the Federal Reserve’s aggressive flip away from doing everything it can to prop up financial markets and the economy. The central bank has already pulled its key short-term interest rate off its record low of zero, where it sat for nearly all the pandemic. Last week, it signaled additional increases of double the usual amount may hit in upcoming months, in hopes of stamping out the high inflation sweeping the economy.

The moves by design will slow the economy by making it more expensive to borrow. The risk is the Fed could cause a recession if it moves too far or too quickly. In the meantime, higher rates discourage investors from paying very high prices for investments, because investors can get more than before from owning super-safe Treasury bonds instead.

That’s helped cause a nearly 28% tumble for bitcoin since April’s start, for example. It dropped 3.4% Monday.

Worries about the world’s second-largest economy added to the gloom Monday. Analysts cited comments over the weekend by a Chinese official warning of a grave situation for jobs, as the country hopes to halt the spread of COVID-19.

Authorities in Shanghai have again tightened restrictions, with at least one citizen saying it felt endless, just as the city was emerging from a month of strict lockdown after an outbreak.

The fear is that China’s strict anti-COVID policies will add more disruptions to worldwide trade and global supply chains, while dragging on its economy, which for years was a main driver of global growth.

In the past, Wall Street has been able to remain steady despite similar pressures because of the strong profit growth that companies were producing.

But this most recent earnings reporting season for big U.S. companies has yielded less enthusiasm. Companies overall are reporting bigger profits for the latest quarter than expected, as is usually the case. But discouraging signs for future growth have been plentiful.

The number of companies citing “weak demand” in their conference calls following earnings reports jumped to the highest level since the second quarter of 2020, strategist Savita Subramanian wrote in a BofA Global Research report. Tech earnings are also lagging, she said.

The tech sector is the largest in the S&P 500 by market value, giving it additional weight for the market's movements. Many tech-oriented companies saw profits boom through the pandemic as people looked for new ways to work and entertain themselves while locked down at home. But slowdowns in their profit growth leave their stocks vulnerable after their prices shot so high on expectations of continued gains.

The higher interest rates engineered by the Fed are also hitting their stock prices particularly hard because they’re seen as some of the market’s most expensive. The Nasdaq composite’s loss of roughly 24% for 2022 so far is much sharper than that for other indexes.

The yield on the 10-year Treasury has shot to its highest level since 2018 as inflation and expectations for Fed action rose. It moderated a bit Monday, dipping to 3.11% from 3.12% late Friday.

In Asian stock markets, Japan's Nikkei 225 fell 2.5%, and South Korea's Kospi lost 1.3%. Stocks in Shanghai inched up 0.1%.

In Europe, France’s CAC 40 fell 1.7%, and Germany’s DAX lost 1.2%. London's FTSE 100 was down 1.5%.

Apart from concerns about inflation and coronavirus restrictions, the war in Ukraine is still a major cause for uncertainty. More than 60 people were feared dead after a Russian bomb flattened a school being used as a shelter, Ukrainian officials said. Moscow’s forces pressed their attack on defenders inside Mariupol’s steel plant in an apparent race to capture the city ahead of Russia’s Victory Day holiday Monday.

Even the energy sector, a star performer in recent weeks, was under pressure Monday. Benchmark U.S. crude fell 4.1% to $105.28 per barrel, though it's still up more than 40% this year. Brent crude, the international standard, fell 3.6% $108.40 a barrel.

___

AP Business Writer Yuri Kageyama contributed.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Corporate News, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Financial Services
© Copyright 2022 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Wall Street joins worldwide swoon on rate, China worries
Wall Street is tumbling toward its lowest point in more than a year on Monday
10:21AM ( 18 minutes ago )
Live updates | EU official: 'silos' of food stuck in Odesa
During a visit to Odesa, a major Ukrainian port, European Council chief Charles Michel, has lamented that “silos” of wheat and corn for expert are blocked as a result of Russia's war against Ukraine
10:07AM ( 32 minutes ago )
Pulitzer Prizes for 2021 journalism, arts to be announced
The Pulitzer Prizes are set Monday to honor the best journalism from a tumultuous year that saw an insurrection, the frantic end of the United States’ longest war and fallout from the ongoing coronavirus pandemic and catastrophic climate change
10:06AM ( 33 minutes ago )
Associated Press (AP)
Sri Lankan prime minister resigns after weeks of protests
Sri Lankan Prime Minister Mahinda Rajapaksa has resigned following weeks of protests demanding that he and his brother, the president, step down over the country’s worst economic crisis in decades
9:29AM ( 1 hour ago )
Russian ambassador to Poland hit with red paint
Protesters have thrown red paint on the Russian ambassador to Poland as he arrived at a cemetery in Warsaw to pay respects to Red Army soldiers who died during World War II
9:22AM ( 1 hour ago )
US, Italy united on Ukraine, with slightly different tones
Italian Premier Mario Draghi meets with U.S. President Biden this week in Washington as Europe faces another “whatever it takes” moment, with war raging on its eastern flank in Ukraine
9:09AM ( 1 hour ago )
AP Business
Global shares mostly fall as rate hikes, China slowdown loom
Global shares have fallen as interest rate hikes and a slowing Chinese economy weighed on investor sentiment
5:14AM ( 5 hours ago )
Asian shares mostly fall as rate hikes, China slowdown loom
Shares are lower in most Asian markets as interest rate hikes and a slowing Chinese economy weigh on investor sentiment
3:13AM ( 7 hours ago )
China trade weakens after cities shut down to fight virus
China’s export growth tumbled in April after Shanghai and other major industrial cities were shut down to fight virus outbreaks
2:11AM ( 8 hours ago )
AP Business - Corporate News
Sri Lanka deploys troops to capital after clash at protest
Sri Lanka authorities deployed armed troops in the capital Colombo on Monday hours after government supporters attacked protesters
5:51AM ( 4 hours ago )
Live updates | Putin: Campaign in Ukraine forced, necessary
Russian President Vladimir Putin has sought to cast Moscow’s military action in Ukraine as a forced response to Western policies
4:57AM ( 5 hours ago )
Live updates | Japan joins G-7 effort to quit Russian oil
 Prime Minister Fumio Kishida says Japan will slowly phase out Russian oil imports in unity with the Group of Seven’s effort against Russia’s invasion of Ukraine
12:44AM ( 9 hours ago )
AP Business - Economy
Stocks open lower, yields rise at end of a topsy-turvy week
Stocks are opening lower and bond yields are rising as yet another report of robust hiring suggests the Federal Reserve will need to keep pressing the fight against inflation and cool off the economy with higher interest rates
9:48AM ( 3 days ago )
US futures skid on recession fears ahead of jobs report
Wall Street appeared headed for another selloff to finish the week Friday as fears spread that U.S. interest rate hikes to fight inflation might stall economic growth
8:28AM ( 3 days ago )
Global stocks, Wall St futures skid on fears over rate hike
Global stocks and Wall Street futures are lower as fears spread that U.S. interest rate hikes to fight inflation might stall economic growth
4:58AM ( 3 days ago )
AP Business - Financial Markets
Live updates | Ukraine warns Russian missile strikes likely
Ukraine’s military is warning that there is a “high probability of missile strikes” amid Russia’s war on the country
1:43AM ( 8 hours ago )
Crews work through 2nd night after Cuba hotel blast kills 27
The search continues for victims of a hotel explosion that killed at least 27 people in Cuba’s capital and left more than a dozen missing amid the rubble
11:59PM ( 1 day ago )
Chelsea being sold to Dodgers owners for sports record $3BN
Chelsea is being sold to a consortium fronted by Los Angeles Dodgers part-owner Todd Boehly
3:47PM ( 1 day ago )
AP Business - Industries
US added 428,000 jobs in April despite surging inflation
America’s employers added 428,000 jobs in April, extending a streak of solid hiring that has defied punishing inflation, chronic supply shortages, the Russian war against Ukraine and much higher borrowing costs
12:47PM ( 2 days ago )
Boeing will move its headquarters to DC area from Chicago
Boeing says it plans to move its corporate headquarters from Chicago to the Washington, D
8:01PM ( 3 days ago )
Anti-discriminatory bank law getting update for modern era
The three major U.S. banking regulators say they plan to rewrite many of the outdated regulations tied to a decades-old banking law
4:54PM ( 3 days ago )
AP Business - Financial Services
Live updates | EU official: 'silos' of food stuck in Odesa
During a visit to Odesa, a major Ukrainian port, European Council chief Charles Michel, has lamented that “silos” of wheat and corn for expert are blocked as a result of Russia's war against Ukraine
10:07AM ( 32 minutes ago )
Pulitzer Prizes for 2021 journalism, arts to be announced
The Pulitzer Prizes are set Monday to honor the best journalism from a tumultuous year that saw an insurrection, the frantic end of the United States’ longest war and fallout from the ongoing coronavirus pandemic and catastrophic climate change
10:06AM ( 33 minutes ago )
With Marcos Jr. tipped to win, Philippines at tenuous moment
The son and namesake of ousted Philippine dictator Ferdinand Marcos has taken a commanding lead in an unofficial count of more than 60% of the votes in Monday’s presidential election in the deeply divided Asian democracy
10:06AM ( 34 minutes ago )
Hip to be smart: 'Jeopardy' savors run of super champions
It's cool to be smart again: the game show “Jeopardy!”
10:03AM ( 37 minutes ago )
'A Strange Loop' earns a leading 11 Tony Award nominations
“A Strange Loop,” Michael R
10:00AM ( 40 minutes ago )