All 11 main industry groups in the S&P 500 fell, with consumer stocks leading the retreat. The Nasdaq 100 fell 3%, with megacaps Apple Inc., Microsoft Corp. and Amazon.com Inc. falling more than 3%. Target Corp. tumbled more than 20% after trimming its profit forecast due to a surge in costs. Shares of retailers from Walmart Inc. to Macy’s Inc. were also down.
Treasuries rose across the board, sending the 10-year Treasury yield 6 basis points lower. The dollar rose against all of its Group-of-10 counterparts, except the yen and Swiss franc. The benchmark S&P 500 is emerging from the longest weekly slump since 2011, but rebounds in risk sentiment are proving fragile amid tightening monetary settings, Russia’s war in Ukraine and China’s Covid lockdowns.
In some of his most hawkish remarks to date, Federal Reserve Chair Jerome Powell said Tuesday that the US central bank will raise interest rates until there is “clear and convincing” evidence that inflation is in retreat. Chicago Fed President Charles Evans said Wednesday he sees a half-point rate increase at next month’s meeting and “probably thereafter.”“We are pricing in a growth scare,” Lori Calvasina at RBC Capital Markets told Bloomberg TV. “The market is trying to find a bottom here.
“The threat to asset prices is broad-based inflation pushing central banks to tighten monetary policy even more rapidly,” Carl Ludwigson at Bel Air Investment Advisors said in a note. “If the Federal Reserve’s policy response proves too aggressive, then Treasuries and high-quality municipal bonds will again be the place to hide as tighter financial conditions lead to demand destruction.”
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