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Wall Street retreats as rate hike concerns persist

 

U.S. stocks closed lower on Monday, adding to last week’s sharp losses on nagging concerns about the Federal Reserve’s determination to aggressively hike interest rates to fight inflation even as the economy slows.

The Dow Jones Industrial Average fell 184.41 points, or 0.57 percent, to 32,098.99, the SP 500 lost 27.05 points, or 0.67 percent, to 4,030.61, and the Nasdaq Composite dropped 124.04 points, or 1.02 percent, to 12,017.67.

Money market traders are pricing in a 72.5 percent chance of a 75-basis-point interest rate hike at the Fed’s September meeting, which would be the third straight hike of that magnitude.

Megacap technology and growth stocks such as Apple, off 1.37 percent, and Microsoft, down 1.07 percent, were among the biggest drags on the index as Treasury yields rose.

Energy stocks, up 1.54 percent, were a bright spot as crude prices jumped about 4 percent on possible OPEC+ output cuts and the conflict in Libya.

Fed Chair Jerome Powell said on Friday that the U.S. economy would need tight monetary policy “for some time” before inflation is under control, dashing hopes the Fed might pivot to more subdued rate hikes after recent data suggested price pressures were peaking. The two-year Treasury yield, which is particularly sensitive to interest rate expectations, briefly touched a 15-year high, while the closely watched yield curve, measured by the gap between the two- and 10-year yields, remained firmly inverted.

“I don’t see a whole lot of upside or downside here in the near term. I see a lot of volatility, and that is probably going to be the case at the very least until we get past the September 21 rate hike.”

Bristol-Myers Squibb slid 6.24 percent after its drug candidate for preventing ischemia strokes missed the main goal in a mid-stage trial. The S&P 500 posted 2 new 52-week highs and 22 new lows; the Nasdaq Composite recorded 28 new highs and 199 new lows. The SP 500 recovered from session lows that put it down 1 percent at the lowest in a month, but the benchmark index still notched its biggest two-day percentage decline in 2-1/2 months.

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