It was reported on May 10, 2022, that the three major U.S. stock exchanges fell sharply on May 9. The market sell-off drove the Dow down more than 600 points, and the S&P 500 fell below 4,000 points for the first time in more than a year.
The Dow Jones Industrial Average fell 1.99% to 32,245.70, The Nasdaq Composite dropped 4.29% to 11,623.25 and the S&P 500 fell 3.2% to close at 3,991.24.
The stock market ushered in a fresh wave of violent selling on Monday, as the Federal Reserve released its aggressive monetary tightening policy last week and investors anxiously waited for more inflation data and first-quarter financial statements from corporations.
The VIX, the fear index, rose above 34 on Monday, well above its long-term average of around 20. The 10-year Treasury yield was above 3%, the highest level since late 2018.
Except for consumer goods, almost all industry stocks fell into the red. Rising interest rates continued to weigh on tech stocks, while other sectors’ consumer stocks suffered along with industrials, and banks were also under pressure.
Boeing Co. tumbled more than 10 percent on Monday, the biggest drop on the Dow, followed by energy giant Chevron.
Barclays’ Maneesh Deshpande said he expects the market to remain volatile as stagflation risks continue to mount, with risks expected to be skewed to the downside.
Monday’s move came after Wall Street ended a shaky week of daily volatility as investors weighed the prospect of higher interest rates and slower economic growth, CNBC reported.
Jeff Kilburg of Sanctuary Wealth, an investment firm, said Monday’s market performance was a significant repricing, primarily due to the Fed’s monetary tightening announced last week.
The Federal Reserve announced a 50 basis points rate hike on the 4th and began to shrink its balance sheet in June. However, chairman Powell played down the possibility of 75 basis points rate hike in the future. Wall Street is closely watching speeches from several Fed officials this week.
The Wall Street Journal reported that volatility in the market since 2022 reflects a range of investor concerns. Inflation in the United States is climbing at the fastest pace in decades, which has forced the Federal Reserve to launch its most aggressive monetary tightening since the 1980s. As a result, investors are questioning whether the Fed will be able to complete its planned process of raising interest rates and shrinking its balance sheet without tipping the economy into recession.
Economists estimated a 28 percent chance that the U.S. economy will slip into a recession sometime in the next 12 months, up from 18 percent in January, according to an April survey by The Wall Street Journal.
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