The S&P 500 has fallen about 15 percent this year.
Published On 9 May 2022
Stocks dropped amid concern over how much the Federal Reserve will have to boost rates to tame decades-high inflation without throwing the economy into a recession.
Traders will be closely watching a host of central bank speakers this week after Chair Jerome Powell on Wednesday played down the option of a 75 basis-point rate hike. Federal Reserve Bank of Atlanta President Raphael Bostic told Bloomberg Television he favors policy makers continuing to raise rates by half-point increments rather than doing anything larger. Meantime, his Minneapolis counterpart Neel Kashkari said he’s confident officials will bring inflation down.
The S&P 500 traded near its lowest level in a year. The gap between five- and 30-year rates grew to the widest in just over six weeks as long-dated bonds came under pressure. Two-year notes — the most sensitive to imminent changes in policy — rallied, with yields tumbling. The dollar advanced.
The outlook for US stocks isn’t particularly bright, even if an outright recession is avoided, according to Goldman Sachs Group Inc. strategists. The S&P 500 has fallen about 15% this year as high inflation readings, a slowing economy and aggressive tightening by the Fed have weighed on risk appetite and valuations.
Here are key events to watch this week:
- Cleveland Fed President Loretta Mester, Atlanta Fed President Raphael Bostic, New York Fed President John Williams, Fed Governor Christopher Waller speak, Tuesday
- Atlanta Fed President Raphael Bostic speaks, Wednesday
- US CPI, WednesdayEIA crude oil inventory report, Wednesday
- San Francisco Fed President Mary Daly speaks, Thursday
- US PPI, initial jobless claims, Thursday
- University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
- The S&P 500 fell 1.5% as of 9:31 am New York time
- The Nasdaq 100 fell 1.7%
- The Dow Jones Industrial Average fell 1.3%
- The Stoxx Europe 600 fell 1.8%
- The MSCI World index fell 1.6%
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro was little changed at $1.0542
- The British pound was unchanged at $1.2348
- The Japanese yen fell 0.2% to 130.76 per dollar
- The yield on 10-year Treasuries was little changed at 3.12%
- Germany’s 10-year yield was little changed at 1.13%
- Britain’s 10-year yield was little changed at 1.99%
- West Texas Intermediate crude fell 2.3% to $107.26 a barrel
- Gold futures fell 0.8% to $1,866.90 an ounce
–With assistance from Sunil Jagtiani, Srinivasan Sivabalan, John Viljoen and Vildana Hajric.