Powell talks up interest rates, Dow Jones falls 202 points

NEW YORK, New York – Stocks in the United States fell sharply on Monday following a warning from the head of the U.S. Federal Reserve that interest rates could be raised more aggressively if necessary.

“The labor market is very strong, and inflation is much too high,” Fed Chair Jerome Powell told a National Association for Business Economics conference on Monday. “There is an obvious need to move expeditiously to return the stance of monetary policy to a more neutral level, and then to move to more restrictive levels if that is what is required to restore price stability,” he said.

Also concerning investors is the war in Ukraine, which appeared last week to be nearing an end as talks between Russia and Ukraine had shown glimpses of a potential truce. However, as the new week begins optimism for a breakthrough has faded.

“The market is digesting the impact of tighter financial conditions, higher oil prices, and continued geopolitical uncertainty against a backdrop of growth, at least in the U.S.,” Erin Browne, a portfolio manager for multi-asset strategies at PIMCO in Newport Beach, California, was quoted by Reuters as saying in an email Monday.

The Dow Jones Industrial Average dived 201.94 points, or 0.58%, to close Monday at 34,552.99.

The Standard and Poor’s 500 inched down 1.94 points, or 0.040%, to 4,461.18.

The Nasdaq Composite fell 55.38 points, or 0.40%, to 13,838.46.

The U.S. dollar was mixed but little changed. The euro eased to 1.1017 by the New York close Monday. The British pound was stronger, rising to 1.3164. The Japanese yen weakened to 119.47. The Swiss franc firmed to 0.9335.

The Canadian dollar edged up to 1.2593. The Australian dollar after hitting an earlier intraday higher of 0.7425, retreated to 0.7397. The New Zealand dollar eased to 0.6886.

Overseas, the Dax in Germany fell 0.60 percent. The CAC 40 in Paris, France eased 0.57 percent. In London, conditions were more favorable. The FTSE 100 rose 0.51 percent.

In Japan, the Nikkei 225 advanced 174.53 points or 0.65 percent to 26,827.43.

The Australian All Ordinaries slipped 12.30 points or 0.16 percent to 7,558.90.

China’s Shanghai Composite barely moved, adding just 2.61 points or 0.08 percent to 3,353.69.

In New Zealand, the S&P/NZX 50 inched up 1.90 points or 0.02 percent to 12,177.75.

The Kospi Composite in South Korea fell 20.93 points or 0.77 percent to 2,686.05.

The Hang Seng in Hong Kong finished down 191.06 points or 0.89 percent at 21,221.34.

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