Wall street
Stocks fell Monday on fears that the Federal Reserve may continue tightening until it steers the economy into a recession.
The Dow Jones Industrial Average fell by 170 points, or 0.5%, while the S&P 500 and Nasdaq Composite slid by 0.5% and 0.4%, respectively.
Tesla shares slumped on reports of an output cut at its Shanghai factory, while Macao-linked casino stocks gained on hopes of easing Covid-19 restrictions.
Investors are looking ahead to next week’s Federal Reserve interest rate decision at the conclusion of the central bank’s December policy meeting.
Following a speech last week by Fed Chairman Jerome Powell, markets largely expect the central bank will approve a 0.5 percentage point interest rate increase. That would mark a step down from a series of four straight 0.75 percentage point hikes.
However, Powell also said the “terminal rate,” or point where the Fed stops raising, likely “will need to be somewhat higher” than indicated at the September meeting. That could mean a fed funds rate that ends up in excess of 5%, from its current target range of 3.75%-4%.
Friday’s nonfarm payrolls report added to the market’s Fed anxiety. Average hourly earnings rose 0.6% for November, twice the Dow Jones estimate, and the 12-month increase was 5.1%, half a percentage point above expectations. Wage pressures on inflation could force the Fed into an even more aggressive stance.
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