DJIA: 32,245.70, down 653.67
S&P 500: 3,991.24, down 132.10
Nasdaq: 11,623.25, down 521.41

S&P 500 drops below 4,000

U.S. stocks finished firmly lower on Monday as a confluence of headwinds continued to pressure risk appetite. The S&P 500 retreated 3.2% to end below the 4,000 level for the first time since March 2021. The broad benchmark just came off its first five-week losing streak since June 2011. The Nasdaq Composite tumbled 4.3%, now more than 27% below its November 19 record high, while the Dow fell 653 points. Treasuries rallied amid the perceived risk off mood, recouping some of last week’s losses. The yield on the 10-year note eased 10 basis points (0.10%) to 3.03% but has still climbed 1.52% this year to a peak not seen since late 2018.

Ten of 11 S&P 500 sectors closed in negative territory. Energy shares weathered their worst session of the year amid a slide in oil prices. West Texas Intermediate crude shed 6.7% to $102.37/barrel as ongoing pandemic-related lockdowns in China dampened demand prospects. The more traditionally defensive Consumer Staples group bucked the downtrend to end just above the flat line.

Investors continued to assess the implications of the Federal Reserve’s (Fed) path of monetary policy tightening. Last week, officials raised their benchmark interest rate by 0.50% for the first time since 2000 and signaled additional increases of similar magnitude in the coming months to combat elevated inflation. A solid monthly jobs report from the Labor Department on Friday reinforced the Fed’s plans. Meanwhile, China’s zero-COVID policy and the ongoing Russia-Ukraine war have only exacerbated worries of supply chain issues and inflationary pressures. A key update on the Consumer Price Index (CPI) on Wednesday will be closely monitored.

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