Stocks fall after Powell comments on interest rates

US stocks fell and oil prices rose as investors reacted to the Federal Reserve’s new comments after the major indicators’ Strong end last week.

The S&P 500 fell 0.6% in the afternoon, retreating after comments from Federal Reserve Chairman Jerome Powell about The potential for sharper movements in interest rates to tame inflation. Treasury yields rose after his comments.

The technology-focused Nasdaq Composite is down about 1.2% recently, while the Dow Jones Industrial Average is down 336 points, or 1%.

Boeing

Shares fell 4.4 percent after it was operated by a Boeing 737 passenger plane

China Eastern Airlines

Holds more than 130 people crashed in southern China.

Investors digested Mr. Powell’s comments on Monday as the Federal Reserve Chairman discussed the economic outlook. Speaking at the National Association for Business Economics, he said the central bank is ready to raise interest rates in steps of half a percentage point — and high enough to deliberately slow the economy — if necessary to combat inflation.

“Investors are taking Powell’s transparency a step further to say ‘He’s only preparing us for the worst,'” said Shannon Sacosia, chief investment officer at Boston Private. [rate increases], and you are not listening. “

The yield on the benchmark 10-year Treasury rose to 2.295% from 2.146% on Friday, according to Tradeweb. Investors expect Additional increases in interest rates From the Federal Reserve this year as the central bank aims to slow inflation, which is running at its highest levels in four decades. Analysts say higher yields may dent the appetite for riskier assets. Yields and prices move inversely.

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“I wouldn’t say the bonds look like an exceptional investment at this point in time, but they are certainly more balanced than they were earlier in the year,” said Matt Dmitrizen, chief investment officer at Telemus.

Ukraine war It increased volatility in stocks, bonds, commodities and currencies, as investors try to assess the economic impact of sanctions and the potential for disruptions to supply chains. Investors are watching developments outside the region and whether a solution can be found soon. The Ukrainian government has said it will not abandon Mariupol after Moscow gave defenders of the coastal city Until Monday morning to surrender.

“This is the main driver of the markets in the coming days and possibly weeks – it has to do with everything that comes out of the conflict in Ukraine,” said Carsten Brzeski.

Eng Group‘s

Global Head of Macro Research.

In individual stocks, shares

Nielsen Holdings

It fell 7.3 percent after that He turned down a nearly $9 billion takeover offer of the private equity consortium, saying the offer reduces the value of the TV rating company. Insured shares

the rich corp.

increased by 25% after

Berkshire Hathaway

say it I agreed to buy the company for approximately $11.6 billion in cash.

Brent crude futures, the international benchmark, rose 6% to $114.42 a barrel. The price of its US counterpart rose 5.3% to just under $110 a barrel. Rising oil prices have raised fears of continued high inflation and lower economic growth in the United States and Europe, as gas and energy prices undermine household spending on other goods and services.

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Most of the 11 sectors of the S&P 500 fell on Monday. Energy, which recently rose 3.4%, was an exception.

The Russian invasion of Ukraine focused on Europe’s dependence on Russian energy, with Germany out Half of its gas is from Russia. Investors expect that untangling these trade links will lead to higher energy prices for extended periods.

“We have this growing awareness that two supply chains can be broken forever. Energy prices, no matter how the war is resolved, will remain high,” Brzeski said.

Traders worked on the floor of the New York Stock Exchange on Friday.


Photo:

Spencer Platt / Getty Images

The Stoxx Europe 600 was trading across the continent, up less than 0.1%. The Russian stock market remains closed, but trading of government bonds in the Russian local currency resumed on Monday. The Russian Central Bank said it would buy government bonds. Governor Elvira Nabiullina said last week that the Moscow Stock Exchange would gradually open but did not provide any details other than buying the bonds.

Russian local-currency bonds due in March 2033 have fallen to 68.5% of their face value, also known as par, from about 87% before the Russian invasion of Ukraine, according to FactSet. The Russian Central Bank doubled interest rates at the start of the war to 20%. When interest rates rise, the value of the current bond, which pays a lower interest rate, falls.

The Egyptian pound fell more than 13% against the dollar on Monday after the Central Bank of Egypt Raised the key interest rate At a meeting of policymakers presented for three days, he noted the rising inflation pressures he sees in the wake of the Russian invasion of Ukraine.

As with many countries in Africa, Egypt relied heavily on Ukraine and Russia for its wheat imports. According to the United Nations, more than 80% of its wheat imports came from warring countries between 2018 and 2020.

The major indices in Asia closed with a mixed performance. South Korea’s Kospi fell 0.8% and Hong Kong’s Hang Seng fell 0.9%. China’s Shanghai Composite Index rose 0.1%. Markets in Japan are closed for a holiday.

Anna Hertenstein contributed to this article.

Write to Caitlin Ostroff at [email protected] and Hardika Singh at [email protected]

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