US: Stocks end sharply lower amid focus on Federal Reserve

WALL Street equities tumbled on Monday, with all three major indices ending with losses of about two percent or more, as investors nervously eye Federal Reserve Chair Jerome Powell’s next speech on Friday.

Amid worries over the Fed’s ongoing interest rate hikes, the Dow Jones Industrial Average dropped more than 640 points, or 1.9 per cent, to finish at 33,063.61.

The broad-based S&P 500 fell 2.1 per cent to 4,137.99, while the tech-rich Nasdaq Composite Index sank 2.6 per cent to close at 12,381.57.

Powell is due to appear at this week’s annual gathering of central bankers in Jackson Hole, Wyoming, and expected to reiterate the message that the Fed is not yet ready to end the steep rate hikes needed to quell the surge in inflation, despite some signs of progress.

Markets bounced higher in recent weeks as investors seized on signs of a slowing economy, and slight easing of price pressures to send share prices higher.

But Ross Mayfield at Baird said that rally was “was probably a little premature.”

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“Really, nothing in the macro story had changed all that much. The Fed was still signaling rate hikes,” he told AFP.

The week will also bring some key data reports, including the Fed’s favored inflation report, as well as consumer confidence, sales of big-ticket goods, new home sales and an updated read on second quarter GDP, which fell 0.9 per cent.

Andy Kapyrin of Regent Atlantic said the sell-off reflected “a little bit of profit taking in response to what is likely to be a pretty risky week for stocks and bonds.” AFP