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Wall Street’s losses get worse as markets fall worldwide



NEW YORK — Stocks tumbled more on Wall Street on Monday, leaving the S&P 500 at its lowest point in more than a year.

The sales came as renewed concerns over the Chinese economy weighed on global financial markets already battered by rising interest rates.

The S&P 500 gave up 3.2%, adding to its losses following its fifth weekly loss, the longest such streak in more than a decade.

The Dow Jones Industrial Average fell 2% and the Nasdaq slid 4.3% as technology-focused stocks bore the brunt of resales. Monday’s sharp drop put the S&P 500, Wall Street’s main health measure, 16.8% down from the record it set earlier this year.

Sales on Wall Street followed a worldwide slump for the markets. Stocks not only fell in Europe and most of Asia, but everything from old economy crude oil to new economy bitcoin fell. Bond yields and the price of gold also fell.

Among US stocks, the energy sector, which has performed stellarly in recent weeks, generated some of the sharpest declines as energy prices fell. Marathon Oil and APA Corp. each sank more than 14%.

“Basically, investors have a hard time finding a place to hide,” said Sam Stovall, chief investment strategist at the CFRA. “Traditional safe havens like the defense sectors or bonds aren’t that good. The goods are not in good condition.”

The S&P 500 fell 132.10 to 3,991.24. The Dow fell 653.67 points to 32,245.70. The Nasdaq fell 521.41 points to 11,623.25.

Smaller company shares also fell drastically. Russell 2000 dropped 77.48 points, or 4.2%, or 1,762.08 points.

Much of this year’s damage was the result of the Federal Reserve’s aggressive move away from doing everything it could to support financial markets and the economy. The central bank pulled the short-term key interest rate from its record low near zero, where it sat for nearly the entire pandemic. Last week, he signaled that additional increases, twice the usual amount, could be expected in the coming months, in hopes of dispelling the high inflation that has wreaked havoc on the economy.

The moves envisioned will slow the economy by making borrowing more expensive. The risk is that if the Fed moves too far or too fast, it could cause a recession. Meanwhile, higher rates discourage investors from paying too high prices for investments, as investors can get more than before by owning super-secure Treasury bills instead.

This, for example, has resulted in a roughly 29% drop for bitcoin since the start of April. It fell 9.7% on Monday, according to Coindesk. Concerns over the world’s second-largest economy were added to Monday’s darkness. Analysts quoted comments from a Chinese official over the weekend warning of a serious situation for business as the country hopes to stop the spread of COVID-19.

Authorities in Shanghai have re-tightened restrictions amid complaints from citizens that it feels endless as the city emerges from a month of strict quarantine after an epidemic.

The fear is that China’s strict anti-COVID policies will add further disruption to trade and supply chains around the world while dragging its economy, which has been the main driver of global growth for years.

In the past, Wall Street has managed to hold steady despite similar pressures due to strong profit growth generated by companies.

But for major US companies, this latest earnings reporting season has generated less enthusiasm. Companies generally report larger-than-expected profits for the last quarter, as they usually do. But discouraging signs for future growth have been plentiful.

Strategist Savita Subramanian wrote in the BofA Global Research report that the number of companies that spoke of “weak demand” in conference calls after earnings reports rose to the highest level since the second quarter of 2020. Technology gains are also lagging behind, she said.

The technology sector is the largest of the S&P 500 by market capitalization, giving additional weight to market movements. Many tech-focused companies have seen a boom in profits through the pandemic as people look for new ways to work and play while indoors. But the slowdown in profit growth is leaving stocks vulnerable after prices soared on continued earnings expectations.

High interest rates designed by the Fed are hitting stock prices particularly hard, as they are seen as one of the most expensive on the market. The Nasdaq composite’s loss of 25.7% so far for 2022 is much sharper than in other indices.

Electric car maker Rivian Automotive tumbled 20.9% on Monday, following the stock market listing six months ago as restrictions that prevented some major investors from selling their shares expired. It has lost more than three-quarters of its value so far this year.

The 10-year Treasury yield hit its highest level since 2018 as expectations for inflation and Fed action rose. On Monday, it fell to 3.03% from 3.12% late Friday. However, it’s still more than double where the year started.

Falling oil prices put pressure on energy stocks. Benchmark US crude fell 6.1% to settle at $103.09 a barrel, but is still up nearly 40% this year. International standard Brent crude was down 5.7% to settle at $105.94 a barrel.

AP Business Writer Yuri Kageyama contributed. Veiga reported from Los Angeles.





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