Stock Market Today – Monday, August 22: What You Need to Know – TipRanks

Stocks are in the Red to Start Monday’s Trading Session

Last Updated 10:00AM EST

Stock indices are in the red 30 minutes into today’s trading session. As of 10:00 a.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 1.2%, 1.4%, and 1.7%, respectively.

The energy sector (XLE) is the laggard so far, as it is down 2.1%. Conversely, the consumer staples sector (XLP) is the session’s leader with a gain of 2.9%.

WTI crude oil fell below $90 per barrel as investors worry that an economic slowdown will impact demand for oil. As a result, the price is hovering around the high-$86 per barrel range, which equates to a decline of more than 3% from the previous close.

Meanwhile, bond yields are higher, as the U.S. 10-Year Treasury yield is now hovering around 2.99%. This represents an increase of 1.4 basis points from the previous close.

Similar movements can be seen with the Two-Year yield, which is now at 3.31%. However, the spread between the 10-Year and Two-Year U.S. Treasury yields is still negative, as it currently sits at -32 basis points.

Pre-Market Update

U.S. stock futures dipped early Monday morning amid renewed fears of another aggressive interest rate hike.

Futures on the Dow Jones Industrial Average (DJIA) inched 0.46% lower, while those on the S&P 500 (SPX) lost 0.58%, as of 2.59 a.m. EST, Monday. Meanwhile, the Nasdaq 100 (NDX) futures dipped 0.79%.

At the end of Friday’s regular trading session, the S&P 500 closed 1.29% lower, the Dow slipped 0.86%, and the Nasdaq 100 dropped 1.95%.

Fed Firmly Hawkish

The Federal Reserve is most likely to make another 75 basis point appraisal on interest rates in its September meeting. Last week, Federal Reserve Bank of St. Louis President James Bullard commented that he is supportive of a large interest rate hike next month, adding that he is not fully convinced that the worst of the inflation is over.

Moreover, on Friday, Fed Chair Jerome Powell hinted at a significant rate lift intended for the September round, which will be held at the Jackson Hole economic symposium. Stressing the need to bring down inflation on an immediate basis, Powell explained that reaching an inflation range of 2.25%-2.5% as soon as possible is critical to achieving optimal and sustainable employment. The Fed is ready to risk a recession in order to reach its target inflation rate.

China Cuts Rates Again

Meanwhile, the People’s Bank of China reduced its interest rates again, a week after its surprise rate cut. The one-year and five-year benchmark lending rates were trimmed by 5 basis points and 15 basis points, respectively.

This strategic move was made in a further attempt to stabilize a contracting economy by boosting demand. Inflation, stringent trade policies, and the recent bout of Covid-related lockdowns have hurt the economy worse than expected. However, some leading experts are of the opinion that the current interest rate cuts are still not enough to bring back consumers to their previous level of spending, and the economy needs a stronger stimulus to rise again.

This is worrisome for the U.S. economy, as it might be staring at its own future. While the second largest economy in the world is struggling to revive its economy after a severe economic slowdown, the central bank of the world’s largest economy is considering a step that could increase the risk of recession, in order to bring down inflation.

Disclosure

from WordPress https://ift.tt/D7obumP
via IFTTT