NEW YORK — Another selloff in the stock market on Monday deepened Wall Street’s losses from last week, leaving the S&P 500 with its biggest drop since mid-June.
The benchmark fell 2.1%, nearly doubling its losses from last week, when it snapped a four-week winning streak. The Dow Jones Industrial Average fell 1.9% and the Nasdaq 2.5%.
Tech companies and retailers suffered some of the heaviest losses. Stocks of smaller companies also lost ground, driving the Russell 2000 Index down 2.1%.
The latest market drop comes as investors grapple with uncertainty over when the highest inflation in decades will come down significantly, how much will the Federal Reserve need to raise interest rates? interest in controlling it and to what extent will rate hikes slow the economy.
Wall Street will look to better understand these unknowns later this week, when the Federal Reserve holds its annual meeting in Jackson Hole, Wyoming.
“Volatility has risen as investors grow increasingly worried about what they might hear from officials at the upcoming Fed symposium in Jackson Hole,” said Jeffrey Roach, chief economist for LPL Financial.
The S&P 500 fell 90.49 points to 4,137.99. The Dow lost 643.13 points to close at 33,063.61, while the Nasdaq fell 323.64 points to 12,381.57. The Russell 2000 gave up 41.60 points at 1,915.74.
Some 95% of S&P 500 stocks fell. Technology companies, retailers, banks and communication services stocks accounted for a large portion of the index’s decline. Microsoft fell 2.9% and Target 3%. JPMorgan fell 1.7% and Netflix 6.1%.
Movie theater operators also fell in choppy exchanges following news that Cineworld is considering filing for Chapter 11 bankruptcy. The industry is still struggling to recover from the virus pandemic. AMC Entertainment fell 5.5% and Cinemark 5.8%.
Market brights included Signify Health, which jumped 32.1% after the Wall Street Journal reported that Amazon would make a bid for the company.
Bond yields gained ground. The 10-year Treasury yield, which influences rates on mortgages and other loans, rose to 3.03% from 2.97% on Friday evening.
The broader market losses follow a week-long rally. Investors are trying to figure out where the economy is going from here, as stubbornly high inflation is hurting businesses and consumers. Record inflation is also prompting investors to focus on central banks and their efforts to combat high prices without further hurting economic growth.
“You’ve had quite a rally and there’s reason not to know where we go from here,” said Tom Martin, senior portfolio manager at Globalt Investments. “There is still decent potential for a recession.”
Last week’s minutes from the July Federal Reserve board meeting confirmed plans for further rate hikes despite signs of weaker economic activity. Traders fear that aggressive measures to slow the economy could go too far and cause a recession. The US economy has already contracted in the first half of 2022 and Wall Street will get more information on Thursday when the government releases an updated report on the US economy for the second quarter.
Investors are also eagerly awaiting this week’s Federal Reserve conference for signals on further possible rate hikes in the United States to calm runaway inflation. Fed Chairman Jerome Powell is due to speak Friday morning at the central bank’s annual meeting in Jackson Hole, which begins Thursday.
The Fed is holding its meeting after a busy week of economic and corporate data that showed inflation continues to weigh on the economy, but consumer spending remains resilient. Falling gasoline and food prices, for wheat and corn, have helped alleviate some of this pressure. This essentially contributed to curbing the rise in inflation in July, even if prices remain stubbornly high.
“I don’t think we’re out of the woods yet on inflation,” Martin said. “We still don’t really know how inflation is going to evolve and what the Fed is going to do.”
Damian J. Troise and Alex Veiga, The Associated Press