US stock futures fell earlier in the week, indicating that major stock indices may fall again after large fluctuations last week.
S&P 500 futures fell 1.5%. Contracts related to the technology-focused Nasdaq-100 fell 1.7%, while those for the Dow Jones Industrial Average fell 1.2%.
U.S. government bonds sold out again, raising the yield on benchmark 10-year government bonds to 3.171% on Monday from 3.124% on Friday. This set him on a course to settle on a new perennial peak. 10-year yields have risen 1.6 percentage points since the end of 2021, prompting some investors to re-evaluate technology and growth stocks. Bond yields increase when prices fall.
“Yields are rising because investors think inflation is out of control,” said Peter Andersen, founder of Boston-based investment firm Andersen Capital Management. “The reality is that we have been living in an environment with extremely low interest rates for a long time, and it is natural for the Fed to raise interest rates, regardless of inflation figures,” he added.
US bonds and stocks rose last Wednesday after the Federal Reserve approved a half percentage point increase in the reference interest rate on loans to a target range of between 0.75% and 1%. Fed Chairman Jerome Powell said officials were not considering an even bigger increase at the next central bank meeting. Mr Powell also said inflation was too high and that the Fed would take swift action to reduce it. He pointed to the personal consumption price index, which rose 6.6% in March.
A day after Mr Powell’s comments, shares fell sharply and continued to decline until Friday, extending the losing streak for the US market, in which the S&P 500 and Nasdaq Composite Index fell for five consecutive weeks. As of last Friday, the Nasdaq had lost 22% year-to-date, while the S&P 500 was down 13% and the Dow was 9.5% lower.
“There was no news from day to day that would cause this dramatic change in mood for a period of 24 hours. “Market volatility shows that there is a lot of uncertainty about where people think we are headed,” said Mr Andersen.
The prospect of further raising interest rates to fight inflation worries some investors that such measures will slow economic growth. The policy changes came at a time when Russia’s war against Ukraine and measures to curb new outbreaks of Covid-19 in China have clouded prospects.
“We have slowing growth and tightening financial conditions,” said Hani Redha, portfolio manager at PineBridge Investments. “It’s the opposite of what we had in the 18 months before this year, which was the perfect backdrop for venture markets.”
These fears have led some money managers to hold the dollar, seen as a safer investment in times of instability due to its status as a global reserve currency. The WSJ Dollar index, which measures the US currency against a basket of 16 others, rose 0.5% on Monday.
Commodity prices for crude Brent futures fell 1.1 percent to $ 111.15 a barrel.
Abroad, the pan-continental Stoxx Europe 600 fell 1.6%.
In Asia, Japan’s Nikkei 225 fell 2.5 percent on Monday, while Australia’s S & P / ASX 200 fell 1.2 percent.
A woman walked past an electronic display in Tokyo on Monday.
Photo: Eugene Hoshiko / Associated Press
China’s CSI 300 index, which tracks the largest companies registered in Shanghai or Shenzhen, fell 0.8 percent. Markets in Hong Kong were closed for public holidays.
The price of bitcoin fell over the weekend and traded at $ 33,278 on Monday, down 7.5% from Friday’s 17:00 ET. The popular cryptocurrency has lost more than a quarter of its value in the year to date.
Write to Serena Ng at Serena.Ng@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com
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