The US stocks were down on Monday amid fears related to the Federal Reserve continuing tightening which may push the economy into a recession.
It was the Institute of Supply Management (ISM) services’ survey for the month of November which further fuelled concerns that the Fed would continue hiking interest after its ISM Non-Manufacturing Index topped Dow Jones’ estimates and increased when compared with October.
When the session was closed, the Dow Jones Industrial Average was down 482.78 points (1.4 percent) and closed at 33,947.10.
Similarly, the S&P 500 slumped 1.79 percent to settle at 3,998.84 and the Nasdaq Composite 1.93 percent to end the session at 11,239.94.
In this scenario, bond yields pushed higher as equities fell, with the yield on the benchmark 10-year Treasury last trading up nearly 9 basis points at 3.588 percent late Monday.
On the other hand, Tesla shares shed about 6.4 percent on reports of an output cut at its Shanghai factory, while tech stocks like Amazon and Netflix slid 3.3 percent and 2.4 percent respectively over growth concerns.
Salesforce tumbled nearly 7.4 percent as it announced the departure of Slack’s CEO while VF Corp shares slid 11.2 percent after the apparel company cut its outlook.
However, Macao-linked casino stocks gained on hopes of easing Covid-19 restrictions.
After 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.
At the same time, Powell also said the “terminal rate,” or point at which 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 to 4 percent.