All 30 Dow Jones stocks fell, and only 25 stocks in the S&P 500 were trading higher on Monday.
Stocks also fell on Friday as the market snapped a four-week winning streak. Markets rebounded in July and August after the brutal first half of 2022. But the pendulum may swing back into pessimism.
Concerns are growing that the Federal Reserve has not finished with its large interest rate increases yet. The Fed raised interest rates by three-quarters of a percentage point, or 75 basis points, on both June And the July.
But by following the latest data about consumer And the Producer Priceswhich showed that the inflation rate had cooled a bit last month, investors are beginning to hope that the Fed will raise interest rates by just half a point in September.
The common belief was that inflation was declining and the economy might slow. However, the The job market is still going strong Retail sales held up reasonably well, despite inflation.
This has led more market watchers to speculate that the Federal Reserve may remain firm with rate hikes for the foreseeable future. The odds of a rise of another 75 basis points against a rise of half a point are now seen as around 50-50.
“Market expectations of what the Fed will do have a track record of volatility based on economic data,” Lindsey Bell, chief financial and markets analyst at Ally Invest, said in a report on Monday. “As long as the Fed is in the driving seat, volatility is likely to remain high and the market will remain regressive.”
Stocks may be volatile all week as investors wait Federal Reserve Chairman Jerome Powell gives a long-awaited speech At the Federal Reserve’s annual Jackson Hole symposium in Kansas City on Friday. What’s more, the Fed’s next rate decision won’t be until September 21. So a lot of economic data, including the jobs report and inflation numbers for August, awaits us.
“This has been more like a bullish rally in a bear market,” Oktay Kavrak, director of product strategy at Leverage Shares, said of what has happened to stocks in the past few weeks. “Recession is still a fundamental case and inflation is still stubbornly high. This could be one of those years when the market is still volatile.”
As a result, investors are clearly fleeing riskier assets. meme stockSuch as AMC(AMC)And the bed bath behind(BBBY) And the Jim Stop(GME)They were all in the red again on Monday after the big dips last weekend. Bitcoin and other cryptocurrencies also fell on Monday and all fell in the past week.