Stock Prices Fall After Powell Interest Rate Comments

US stocks fell and oil prices rose as investors responded to the new Federal Reserve commentary following the strong finish of key indices last week.

The S & P 500 fell 0.6% in the afternoon trading, following comments from Fed Chair Jerome Powell on the possibility of more aggressive interest rate movements to curb inflation. Following his comment, Treasury yields have risen.

The technology-focused Nasdaq Composite index has recently fallen by about 1.2%, while the Dow Jones Industrial Average has fallen by about 336 points (1%). Boeing shares fell 4.4% after a Boeing 737 airliner with more than 130 passengers operated by China Eastern Airlines crashed in southern China.

Investors digested comments from Mr Powell on Monday, with the Fed chair discussing the economic outlook. At the National Business Economics Society, central banks are ready to raise interest rates by half a percentage point if necessary to combat inflation, high enough to deliberately slow the economy. rice field.

Shannon Saccocia, Chief Investment Officer of Boston Private, said: “On the other hand, the bond market says,’No, no, he says he’s going to do it at least seven times, and you haven’t heard.'”

Benchmark 10-year Treasury yields rose from 2.146% on Friday to 2.295%, according to Tradeweb. Investors are expecting additional interest rates to rise from the Federal Reserve this year as central banks aim to slow inflation, which has been at its highest level in 40 years. Analysts say higher yields can absorb the desire for higher-risk assets. Yields and prices move in the opposite direction.

Matt Dmytryszyn, Chief Investment Officer of Telemus, said:

The Ukrainian War has increased volatility in equities, bonds, commodities and currencies as investors seek to assess the economic implications of sanctions and the potential for supply chain disruption. Investors monitor trends outside the region and whether solutions are readily available. The Ukrainian government said it would not abandon Mariupol after giving Moscow to defenders of the port city until Monday morning until it surrendered.

“This is the main driver of the market in the coming days and even weeks, which is all that arises from the conflict in Ukraine,” said Carsten Brzeski, Global Head of Macro Research at ING Groep. I am.

Nielsen Holdings shares fell 7.3% in private equity, claiming they underestimated television rating companies after rejecting a $ 9 billion takeover offer from the Private Equity Consortium. Shares in insurance company Alleghany Corp. surged 25% after Berkshire Hathaway announced that it had agreed to buy the company for about $ 11.6 billion in cash.

The international benchmark Brent crude oil futures rose 6% to $ 114.42 a barrel. Their US counterpart rose 5.3%, just below $ 110 a barrel. Soaring oil prices have raised concerns about sustained high inflation and slowing economic growth in the United States and Europe, as gas and energy prices eat up household spending on other commodities and services.

Most of the 11 sectors of the S & P 500 fell on Monday. The exception was the energy that recently increased by 3.4%.

Russia’s invasion of Ukraine focuses on Europe’s dependence on Russia’s energy, with Germany getting more than half of its gas from Russia. Investors expect that breaking these trade relationships could lead to long-term rises in energy prices.

“We are increasingly aware that some supply chains can be destroyed forever. No matter how the war is resolved, energy prices will remain high,” he said.

The trader worked on the floor of the New York Stock Exchange on Friday.

Photo: Spencer Pratt / Getty Images

Pangea Stocks Europe 600 traded at less than 0.1%. Russia’s stock market remains closed, but trading of Russian local currency-denominated government bonds resumed on Monday. Russia’s central bank said it would buy government bonds. Governor Elvira Nabiullina said last week that the Moscow Stock Exchange would gradually reopen, but provided no details other than bond purchases.

According to FactSet, Russia’s local currency bonds, which mature in March 2033, have fallen from about 87% before Russia’s invasion of Ukraine to 68.5% of par (also known as par). The central bank of Russia doubled interest rates to 20% at the beginning of the war. As interest rates rise, the value of existing low-interest bonds declines.

The Egyptian pound fell more than 13% against the dollar on Monday after the Egyptian central bank raised key interest rates at a three-day advance policymakers’ meeting due to rising inflationary pressure after Russia’s invasion of Ukraine. did.

Like many African countries, Egypt has relied heavily on Ukraine and Russia for wheat imports. According to the United Nations, more than 80% of wheat imports came from war-torn countries between 2018 and 2020.

Asia’s major indices ended with various performances. South Korea’s Kospi was down 0.8% and Hong Kong’s Hang Seng was down 0.9%. China’s Shanghai Composite Index rose 0.1%. The Japanese market was closed due to a holiday.

— Anna Hirt enstein contributed to this article.

Write to Caitlin Ostroff at [email protected] and Hardika Singh at [email protected].