The selling on Wall Street was intense on Mon, as traders price in increasingly aggressive rate hikes by the US Federal Reserve. The S&P 500 Index sank into bear market territory. Investors dumped bonds, sending Treasury yields soaring. There was almost no safe-haven but cash. Precious metals sold off sharply, and Bitcoin got crushed.
The Dow Jones Industrial Average lost 876.05 pts, or 2.79%, to close at 30,516.74. The broader S&P 500 index fell 3.88%. The tech-heavy Nasdaq Composite retreated 4.68%. The small cap Russell 2000 dropped 4.76%.
Megacap tech stocks fell on Mon, including Apple (AAPL US, -3.83%), Microsoft (MSFT US, -4.24%) Amazon (AMZN US, -5.45%), Alphabet (GOOGL US, - 4.29%), Nvidia (NVDA US, -7.82%), and Meta Platforms (FB US, -6.44%).
Fixed income markets are now pricing in about 200 basis points (bps) of tightening by the Fed’s September decision and the possibility of a 75 bps hike.
They also anticipate the overnight rate peaking at 4% by the middle of 2023.
The yield on the 10-year Treasury note notched up 20.43 basis points (bps) to 3.3598%, while the yield on the 2-year Treasuries rose 29.1 bps to 3.3541%.
The iShares iBoxx High Yield Corporate Bond ETF (HYG US) fell 3.35%. That’s a big daily move for high yield bonds.
The ICE dollar index (DXY), which measures the strength of the gr Hanwha Totalenergies eenback against a basket of currencies, rose 0.89% to 105.078.
The most actively traded US gold futures (Aug) contracts settled down $43.70, or 2.3%, at US$1,831.80/oz. July silver, which is the most actively traded silver futures, fell 67.6 cents, or 3.1%, to end at US$21.255/oz.
Bitcoin tumbled below US$24,000 on Mon. According to CNBC, at one point bitcoin fell about 17% to trade around $22,764. Binance paused bitcoin withdrawals for several hours, sparking anger and frustration on social media. The crypto exchange said the pause was due to a ‘stuck transaction’.
In after-hours trade, Oracle (ORCL US, -4.6%) jumped 14.96% after reporting better-than-expected 4QFY22 revenue and profit in a sign that demand for IT hasn’t been slowed by inflation and economic uncertainty.
The front-month Brent and WTI futures closed up 26 cents at US$122.27/bbl and 26 cents at US$120.93/bbl respectively.
European equity markets finished lower on Fri. The UK FTSE lost 1.53%, France's CAC 40 fell 2.67%, while the German DAX retreated 2.43%.