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Stock prices fell on Monday and took a break after a big backlash last week. The main average fell in the middle of the session as inflation concerns returned to the market. This new caution came as oil prices rose and bond yields rose sharply.
Shares reduced losses towards the closing price, but remained below unchanged levels. The S & P 500 approached scrambling into the positive territory in the last few minutes of trading. However, it continued to show a slight loss by the end of the session.
The Nasdaq fell 0.4%, but the Dow recorded a loss of almost 0.6%.
Looking at the tentative closing price, S & P recovered almost completely from the noon plunge and ended the session just 1.94 points lower. This led to a closing price of 4,461.18.
The Dow fell 201.94 points, ending at 34,552.99. Meanwhile, Nasdaq recorded a final level of 13,838.46, a slide of 55.38 in the session.
Eight of the 11 S & P 500 industry sectors have lost their position in the session, led by Consumer Services and Consumer Discretionary. However, none of the declining segments showed a loss of more than 1%.
Energy recorded the best performance of the day. The move was due to a rise of more than 7% in crude oil, above $ 112 per barrel.
Meanwhile, bonds sold out as traders prepared for a surge in inflation supported by soaring oil prices. The Treasury yield for two years exceeded 2%, rising almost 17 basis points to 2.12%. The Treasury yield for 10 years also rose by about 16 basis points to about 2.30%.
However, Citi’s strategic team argues that soaring oil prices do not necessarily lead to lower global equities. “The world’s equity performance after the oil crisis is inconsistent,” a group led by Robert Buckland said in a memo. Strategists say the latest MSCI AC World price-earnings ratio (19x) looks higher than the average valuation of past oil shocks (16x). ..
According to a note to clients, Kinsdale Trading is “carefully optimistic that stocks are in the process of bottoming out in the short term,” and is stable in the S & P 500’s 4,300-4,600 range. But if the Fed had a significant hawkish shift, accelerated economic growth data, or a reversal of the yield curve, the treatise could collapse, the company said.
Monday’s weak show follows last week’s strong performance, as the Federal Reserve has announced plans to raise rates and has indicated that it will soon finalize plans to shrink its balance sheet.