Business

US stocks have worst day in nearly three weeks as Fed speaks hawkish, China worries about markets


US stocks had their worst day in nearly three weeks on Monday as protests in China increased global growth risks and Federal Reserve officials said more rate hikes would be needed to curb inflation.

How do stocks trade?
  • Dow Jones Industrial Average
    DIA,
    -1.45%

    ended the session down 497.57 points, or 1.5%, at 33,849.46, not far from the session low.

  • S&P500
    SPX,
    -1.54%

    ended the session down 62.18 points, or 1.5%, at 3,963.94.

  • Nasdaq Composite
    COMPUTER,
    -1.58%

    closed down 176.86 points, or 1.6%, at 11,049.50.

According to Dow Jones market data, Monday’s drop was the biggest for all three indexes since Nov. 9. U.S. stocks posted a weekly gain last week, the second in three weeks. . The Dow rose 1.8 percent, the S&P 500 gained 1.5 percent and the Nasdaq gained 0.7 percent.

What drives the market?

Wall Street started the week in an upbeat mood as traders absorbed the impact of the unrest in China and assessed two Fed officials’ comments on interest rates on Monday.

Fed President St. Louis James Bullard told MarketWatch he favors more aggressive rate hikes to curb inflation and that the central bank will likely need to keep rates above 5% in 2024. Meanwhile, John WilliamPresident of the New York Fed, said the US unemployment rate could soar as high as 5% next year, compared with 3.7% in October, due to a series of interest rate hikes by the central bank.

Overseas, Hong Kong’s Hang Seng Index
HSI,
-1.57%

closed down 1.6% and most equity indexes across Asia also fell, with the exception of India, on concerns about unrest in China. Those concerns also spill over into commodity markets, where West Texas Intermediate crude for January delivery
CLF23,
-0.79%

quickly fell below $74 a barrel before recovery and settles at $77.24 a barrel on the New York Mercantile Exchange. Meanwhile, the price of copper HG00 down 1% to $3.59/pound.

“What everyone is worried about is the possibility that the protests in China could spread and whether the population will reach a breaking point,” said Derek Tang, an economist at Monetary Policy Analysis in Washington. or not”. “At the same time, the Fed talk is picking up and the message is there will be more hikes. So investors don’t find relief.”

Analysts say signs that economic activity in China will continue to be disrupted by protests or by additional anti-COVID measures will likely continue to weigh on commodity prices. chemical. Meanwhile, concerns about global growth supported the government bond market early Monday, as 10-year yields fell.
TMUBMUSD10Y,
3.684%

was briefly traded at its lowest level since October.

Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, said the unprecedented wave of protests in China “has caused waves of uncertainty across financial markets, as concerns mount increasing impact on the world’s second-largest economy”.

“As protests spread across the country from Beijing to Xinjiang and Shanghai, reflecting growing anger over the Covid-free policy, the need for a sustainable recovery across the vast country seems to even further.”

But the news isn’t bad: Power Report Black Friday sale online helped boost shares of Amazon.com Inc.
AMZN,
+0.58%
,
ended up nearly 0.7%.

Investors can expect more news on the health of the US economy in what will be a busy week for US economic data: This weekend, investors will get Get the ADP jobs report, then the November jobs report. Revised third-quarter gross domestic product data will be released on Wednesday, along with the Fed’s Beige Book report. Federal Reserve Chairman Jerome Powell will give a public speech on Wednesday and a closely watched inflation gauge will be available on Thursday.

Read: “We see major equity markets down 25% from slightly higher levels today,” Deutsche Bank said.

One-stock movers

Jamie Chisholm contributed to this article.

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