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| The stock market started the new week with significant losses across the board. The major indexes had their worst week since March 2020 last week. |
The Dow Jones Industrial Average was down more than 1,000 points Monday, and the S&P 500 was trading in correction territory. The major indices were on track for their worst day since 2020.
Around midday Eastern time, the S&P 500 was down 3.8 percent, extending its losses for the fifth day in a row and heading for its biggest daily decline since June 11, 2020, when it plummeted 5.9 percent. The index is currently down more than 10% from its January 3 all-time high. The S&P 500 will see its first decline since February 2020 if it closes at or below 4,316.905.
The Dow Jones Industrial Average plummeted by over 1,000 points or 3%. It's down 9% from its all-time high set on Jan. 4, and it's on course for its seventh straight loss and longest losing run since Feb. 28, 2020, when the index lost for seven days in a row. It's the index's lowest day since Oct. 28, 2020, when it dropped 3.4 percent. To enter the corrective territory, it would have to close at or below 33,119.685.
The Nasdaq Composite fell 4.8 percent, marking its fifth consecutive day of losses and its worst showing since Sept. 3, 2020, when it fell almost 5%. Last week, the tech-heavy index entered a correction and is currently down more than 16% from its previous peak. Since October 2008, the index has been on track for its best monthly performance.
On Monday, the Russell 2000 index of small-cap stocks fell into the bear market territory. It will be down more than 20% from its all-time high achieved on Nov. 8 if it closes below 1,954.194.
The selloff on Monday was fueled by "concerns about tighter US Federal Reserve policy and uncertainty about the resolution of ongoing tensions between Russia and Ukraine," according to Mark Haefele, UBS' chief investment officer for global wealth management.
Investors are becoming increasingly anxious about the likelihood of military escalation along Russia's border with Ukraine. In reaction to Russia's military buildup in Ukraine, the North Atlantic Treaty Organization is sending ships and fighter jets to Eastern Europe. Ukraine will also receive more than $1 billion in loans and grants from the European Union.
According to the New York Times, President Joe Biden is considering sending thousands of troops to Eastern Europe. On Monday, the president will have a virtual conference with European allies to examine the issue.
Overseas, the Stoxx 600 index in Europe fell 3.7 percent on Monday, while the Hong Kong Hang Seng Index fell 1.2 percent.
It appears like a stock bubble is bursting. The three major indices had their worst weeks since 2020 last week. The stock market has been anxious about the Federal Reserve's tightening of monetary policy. The S&P 500 has had an excellent run, rising 92 percent from its bear market low in March 2020, as investors benefited from a Federal Reserve that was adamant about supporting the economy and markets. As it strives to combat excessive inflation, the Fed is now moving to the opposite approach.
Traders predict the Fed will raise interest rates four times in 2022 to combat inflation, a move that might stifle economic development. Bond rates have also climbed this year, partly as a result of the Fed's decision to halt its bond-buying program. Future profits become less valued as a result, causing values to fall, especially in tech and growth sectors.
When the economy slows down, smaller businesses are often hurt harder. Smaller businesses are burdened by greater borrowing expenses, which are caused by rising interest rates.
This puts the Federal Reserve under the spotlight this week. On Wednesday, the central bank will make a decision on interest rates. Despite the fact that markets are not expecting a rate rise until March, investors will be watching the bank's announcement to determine if a hike in March is suddenly more or less probable.
Crude oil prices were decreasing in the commodity market. West Texas Intermediate futures contracts sank 2.9 percent to $82.67 a barrel.
Cryptocurrencies were in the red much more. According to CoinDesk statistics, Bitcoin, the most popular digital asset, was trading above $43,000 last Thursday and has since slumped below $35,000. It had dropped about 4% in the previous 24 hours. It was even worse for smaller peer Ether, which fell nearly 8% in the last day to roughly $2,300. Last Thursday, the Ethereum network's underlying currency was trading for more than $3,200.
A probable ban in Russia, as well as the broader sentiment on risky assets, fueled the sharp selloff in cryptos.
Investors will be following results in addition to the Fed meeting. Apple (AAPL), Amazon.com (AMZN), Microsoft (MSFT), Alphabet (GOOGL), and Tesla (TSLA) will all report profits in the next two weeks. Because those stocks are worth a combined several trillion dollars, if they produce substantial earnings swings, they will move the S&P 500 and Nasdaq in one direction or the other.
Here are six stocks on the move Monday:
Kohl's (KSS) jumped 35% after a flurry of press stories, including one from Reuters citing unnamed sources, indicating the store might be getting a second acquisition bid shortly. Shares of Macy's (M) and Nordstrom (JWN) have risen 8.1 percent and 3.1 percent, respectively, as a result of this.
Unilever (UL) rose 6.9% after the Financial Times reported, citing unnamed sources, that activist hedge fund Trian Partners had amassed a stake in the consumer products conglomerate.
Wedbush downgraded Snap (SNAP) from Outperform to Neutral, causing the stock to drop 10.4%.
Netflix (NFLX) shares fell 10.7% after plunging 22% on Friday due to a bleak membership growth projection. Jefferies cut the shares from Buy to Hold on Monday.
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