4:18pm: Dow suffers worst session since June
The Dow closed Monday down 643 points, 1.9%, at 33,064, the Nasdaq Composite slipped 324 points, 2.6%, to 12,382 and the S&P 500 lost 90 points, 2.1%, to 4,138. It was the Dow's worst single session since June.
Investors are again watching Federal Reserve Chair Jerome Powell, who will speak later this week at the Fed's annual meeting at Jackson Hole in Wyoming.
“When you see the market right now dropping down like this, this is the market saying the Fed has to be more aggressive to slow the economy down further," said Robert Cantwell, portfolio manager at Upholdings, as reported by CNBC.
Meanwhile, shares of Netflix Inc (NASDAQ:NFLX) fell more than 6% to $226.54 after the streaming giant's stock was downgraded to "Sell" by analysts at CFRA. The firm warned in a note to clients that shares of Netflix may underperform the S&P 500 Index for the rest of 2022.
12.05pm: US stocks continue in the red
The major US indices hadn’t surfaced from red territory midday, as the bears continued to control trader sentiment.
At midday, the Dow Jones Industrial Average was down 1.3% to 33,257, the S&P 500 was down by 1.6% at 4,161, and the Nasdaq Composite was down by 2% at 12,459.
Chris Beauchamp, chief market analyst at online trading platform IG, said: “Instead of some tentative buying, equities have been hit with a wave of fresh selling, as fears about a recession and the persistence of high inflation combine to spark a bout of fresh risk-off moves.”
Beauchamp noted while there is bound to be some profit-taking after the surge since mid-July, Monday markets have a different feel about them, with fundamental factors really coming back into play.
He added that investors “are now expecting the Fed to have to make more hawkish noises about the likelihood of further rate increases into Q4 2022 and beyond.”
Natural gas prices have surged, but not oil, according to Beauchamp.
“The fact this isn’t simply a round of profit-taking is underlined by the diverging fortunes of natural gas and oil prices. The latter continues to make new highs as the spectre of a European energy crisis and surging demand into the winter looms large once again. But the latter has taken a hit again as recession concerns lead to diminished forecasts of oil demand. Like it or not, it seems that the quiet summer rally in risk assets has met its match,” he said.
At midday, the major movers included CF Industries and Mosaic, both up over 3%, along with Pinduoduo, up by 5%.
On the downside, Netflix fell by over 6% as analysts lowered the stock from Hold to Sell, and both Etsy (NASDAQ:ETSY) and Boeing continued their downward trend from Friday by 6.2% and 3.4% respectively.
10.45am: Proactive North America headlines:
Tesla CEO Elon Musk says Full-Self Driving price to rise to US$15,000
The Valens Company (TSX:VLNS, OTCQX:VLNCF) acquired by Canada's largest private sector liquor and cannabis retailer SNDL in $138M stock deal
Sigma Lithium kicks Brazillian Grota do Cirilo project into high gear
American Resources expands $15M credit line for American Carbon subsidiary
Prospector Metals announces encouraging drill results from maiden program at Toogood property in Newfoundland
United Lithium provides update on summer exploration activities; says additional claim staking programs in progress in the US
Fobi AI (TSX-V:FOBI, OTCQB:FOBIF) announces appointment of Jon Haydock as new chief technical officer
Royal Helium discovers high-grade lithium in brine at Climax project in Saskatchewan
Todos Medical says Provista Diagnostics subsidiary has commercially launched PCR-based MonkeyPox testing in the US
TraceSafe enters into IoT wearables partnership with Saudi Arabia’s solutions by stc
Empower Clinics says it will divest two TMC clinics following operational review
Canntab Therapeutics provides update on recent product delivery of its cannabinoid solutions to the Nova Scotia Liquor Corporation
Canada Silver Cobalt Works begins field work component of Phase 1 exploration at Eby-Otto gold property
Skye Bioscience says Emerald Health Therapeutics shareholders approve integration plan of arrangement; gets regulatory approval to begin first-in-human clinical study
American Eagle Gold begins drilling at NAK copper-gold porphyry project in British Columbia
Stuhini Exploration closes second and final tranche of its upsized non-brokered private placement for gross aggregate proceeds of $948,310.75
VR Resources announces non-brokered private placement for gross proceeds of up to $4 million
9.35am: Meme stocks continue downward spiral
US stocks opened lower on Monday ahead of a big week, with all eyes on the Fed’s annual symposium at Jackson Hole in Wyoming and the release of a slew of economic data including the latest durable goods and GDP figures.
Just after the open, the Dow Jones Industrial Average had shed 380 points or 1.1% at 33,327 points.
The S&P 500 was down 55 points or 1.3% at 4,174 points and the Nasdaq Composite had slipped 196 points or 1.5% at 12,509 points.
Meme stock Bed Bath & Beyond Inc, which tanked late last week following prominent investor Ryan Cohen’s exit from his stake in the company, continues to spiral, down another 12% at the open to about $9.70 per share.
AMC Entertainment Holdings (NYSE:AMC) Inc had also plunged about 38% ahead of the company’s new special dividend shares debut on the NYSE under the ticker symbol APE today.
6:30am: Cautious open
US stocks were expected to start the week lower on Monday as investors focused ahead to the Federal Reserve’s annual symposium at Jackson Hole in Wyoming.
Fed chairman Jerome Powell will deliver a keynote speech on Friday which is expected to be wide-ranging and to include his expectations for inflation, keeping investors wary ahead of the event.
Futures for the Dow Jones Industrial Average were trading 0.9% lower pre-market, while those for the broader S&P 500 index were down 1.0%, and contracts for the tech-laden Nasdaq-100 lost 1.3%.
“All eyes will be on the Federal Reserve’s Jackson Hole meeting. This year, Jackson Hole may have a bigger-than-usual impact on investor sentiment, as investors don’t really know where the market is going, as the market doesn’t really know where the Fed is going,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
To fight runaway inflation, US rate-setters have raised interest rates aggressively through the year but it remains hard to tell if they are winning. Inflation remains stubbornly at levels not seen in 40 years even though there have been some signs that price pressures may be easing. The spate of rate hikes, however, is threatening economic growth, and many fear that the world’s biggest economy will slide into a recession.
“The July equity rally was mainly triggered by the expectation - and not the fact, nor an announcement - that the Fed could soften its policy and start cutting the interest rates if the US economy sinks into recession,” noted Ozkardeskaya.
“While there are flashing signs that recession could be just around the corner, there have been no signs, or a mention, or a hint that the Fed would start re-lowering its rates at any point in the foreseeable future,” she added.
Further afield, markets are finding more reasons to be cautious.
“Last week marked the end of a four-week winning rally in the US stocks, and the new week starts with the unpleasant news that drought in China’s Sichuan region will cause ‘severe’ power cuts,” noted Ozkardeskaya.
A bunch of economic data is due through the week ahead of the Jackson Hole symposium and will likely set the tone for trading.
“We will have a better idea on the latest PMI figures, the US durable goods orders, the latest US GDP data, and the PCE, another gauge of inflation that’s closely watched by the Fed,” added Ozkardeskaya.
The durable goods figures are due Wednesday and GDP data are due on Thursday.
Contact the author at jon.hopkins@proactiveinvestors.com