Stocks slide in volatile trading as investors brace for further big rate hikes

New York
CNN Business

Welcome to the lazy, crazy days of summer on Wall Street. Shares fell again on Monday in a choppy session. So it looks like investors weren’t quite ready to buy the proverbial drop in the absence of any major news.

The Dow ended Monday down nearly 185 points, or 0.6%. The index closed its lows for the day well and even briefly moved into positive territory at one point. But investors continue to fear that youhe Federal Reserve will continue to raise interest rates sharply.

Stocks fell on Fridaywith the Dow plunging more than 1,000 points, after Fed Chairman Jerome Powell gave a much-anticipated speech in Jackson Hole, Wyoming, in which he talked about the “pain” of rate hikes but indicated that the Fed was serious about controlling inflation.

Investors are now pricing in nearly 75% chance of getting a third game in a row three-quarter point rate hike at the Fed meeting on September 21. Just a month ago, the odds of a rate hike of this magnitude stood at just 28%, with investors beginning to predict the Fed would slow the pace of rate hikes by half a point.

The S&P500 fell more than 3% on Friday as the Nasdaqhome to many of America’s greatest tech stocks, fell 4%. The S&P 500 was down 0.7% on Monday while the Nasdaq slipped 1%. Stocks are now down for August and heading towards what is generally the worst month for the market.

Some believe that the impact of future Fed rate hikes may now be priced into the market. Even if the economy slows, earnings growth could still be decent, but not spectacular.

“The pain Powell predicted for businesses and consumers will be real, but modest equity gains can be fueled by slowing mid-single-digit earnings growth,” Robert Teeter, managing director of Silvercrest Asset Management, said in a statement. a report.

But investors are clearly getting nervous again and starting to avoid riskier assets. Along these lines, bitcoin prices briefly dipped below $20,000, hitting their lowest level since mid-July.

Meme stocks GameStop

and AMC

rebounded, however, after both falling on Friday. Another meme stock, Bed Bath & Beyond

, also defied the general market collapse. It rose 6% on Friday and built on those gains on Monday, rising more than 20%.

Another sign of investor anxiety is the yield on the 10-year Treasury bond continued to rise, reaching around 3.1%. Oil prices were also higher, contributing to inflation fears. With that in mind, energy stocks were the big winners on Monday. Dow Chevron Component

rose nearly 1% while Diamondback Energy

led the S&P 500 with a 4% gain.

The change in sentiment on Wall Street was abrupt and sudden.

Just two weeks ago, the CNN Corporate Fear and Greed Indexwhich examines the CBOE Volatility Index (VIX

) and six other measures of investor sentiment, was showing signs of greed. The index is now in neutral mode after recently approaching fear territory. The VIX

has climbed more than 20% in the past month.

Investors are once again considering all the risks of the market and the global economy. It’s not just inflation after all.

“Uncertainty remains high over inflation, energy prices, the war in Ukraine and economic policy in China, so investors should remain alert to the risk of worse scenarios,” Mark said. Haefele, chief investment officer at UBS Global Wealth Management. in a report. “We see this as a time to be selective.”

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