Home Interest rate Dow drops 300 points to start week as Wall Street rally declines

Dow drops 300 points to start week as Wall Street rally declines


Stocks open lower on Monday

Stocks opened lower on Monday as the summer rally faded ahead of the Federal Reserve symposium in Jackson Hole. The Dow Jones Industrial Average fell 376 points, or 1.12%. The S&P 500 and the Nasdaq Composite fell 1.29% and 1.42% respectively.

—Sarah Min

VIX at the highest level since August 3

A measure of equity volatility called VIX hit its highest level since Aug. 3.

The Cboe Volatility Index climbed 2.6 points to 23.16 on Monday, although it was still below its recent high when it topped 30 in June.

—Sarah Min

Powell will be ‘significantly more hawkish’ in Jackson Hole, according to Wolfe Research

Federal Reserve Chairman Jerome Powell will likely take an aggressive stance against inflation in his Jackson Hole speech on Friday, according to Wolfe Research.

“We expect Powell to look more hawkish in Jackson Hole,” Wolfe Research’s Chris Senyek wrote in Monday’s note.

“As we discussed at length previously, we believe the Fed should raise the fed funds rate to 4.5%+ to put inflation back on a sustainable path toward the FOMC’s long-term 2% target,” he added.

The research firm said the central bank was “behind the curve” and explained reasons why it is not buying into the bullish scenario, including slowing global growth and inflated earnings expectations.

—Sarah Min

AMC shares sink as Cineworld plans to file for bankruptcy

Report surges on the Amazon report

Shares of Signify Health jumped nearly 38% in Monday’s premarket trading following a Wall Street Journal report that said Amazon is among several companies bidding for the healthcare company.

The tech giant, along with CVS Health and UnitedHealth Group, is participating in an auction that would value Signify at more than $8 billion, according to the report citing people familiar with the matter.

Amazon shares were down 2% in premarket trading on Monday.

Buffett would not have opted for a complete takeover of Occidental

It’s time to sell Netflix, says CFRA

Netflix has rebounded strongly since mid-July, but the good times for streaming stock won’t last long, according to CFRA.

Analyst Kenneth Leon downgraded Netflix to sell on hold, noting that: “The key catalyst for NFLX – the introduction of new advertising subscription plans – may not be seen until 2023.”

Netflix shares fell 2% in premarket.

CNBC Pro subscribers can read the full story here.

—Fred Imbert, Carmen Reinicke

The euro returns to the dollar parity

The euro briefly slipped below parity with the US dollar on Monday for the first time since mid-July as fears of a eurozone recession resurfaced.

By 9:15 a.m. London time, the common currency had rallied slightly and was trading at exactly $1.

-Elliot Smith

European markets fall as fears of rate hikes resurface

European markets fell on Monday as fears of more aggressive interest rate hikes from the Federal Reserve and the European Central Bank returned to the fore.

The pan-European Stoxx 600 slipped 1.2% in mid-morning London as autos fell 2.9% to lead the losses, with all sectors and major exchanges trading in negative territory.

Risk sentiment was dampened by hawkish signals from ECB policymakers, with Bundesbank President Joachim Nagel telling a German newspaper that the ECB should continue raising interest rates even as recession risks in Germany were increasing.

The minutes of the ECB’s latest policy meeting will be released on Thursday, while investors will be watching flash Eurozone PMIs due on Tuesday.

China’s central bank lowers interest rates

The People’s Bank of China cut its benchmark one-year lending rate by 5 basis points and its five-year rate by 15 basis points, according to an online statement.

This brings the one-year loan prime rate to 3.65% and the five-year LPR to 4.3%.

Analysts polled by Reuters had expected a 10 basis point cut in the LPR over one year, and half of survey respondents expected the five-year rate to be cut by 15 basis points.

—Abigail Ng

CNBC Pro: How to Reduce Risk in Your Portfolio Right Now, According to the Pros

Equities have been volatile this year as a mix of recession fears, inflationary pressures and other macro risks rock markets.

Here are three ways investors can adjust their portfolios to reduce their risk or mitigate their losses, according to Goldman Sachs, Wells Fargo and others.

Pro subscribers can learn more here.

—Weizhen Tan

CNBC Pro: JPMorgan predicts when growth stock rally will end

Investors have been flocking to growth stocks lately, but as recession fears grow, market watchers are deciding to turn to safer bets instead.

JPMorgan, however, thinks the rally still has some way to go and has named several indicators to watch when considering a spin out of growth stocks.

Pro subscribers can read the story here.

— Zavier Ong

End of earnings season

Investors are wrapping up earnings season with only a few dozen S&P 500 companies still to go. Of the 95% of companies in the broader market index that reported earnings, about 75% exceeded expectations, according to FactSet.

—Sarah Min

What to expect from Powell’s speech in Jackson Hole

Fed Chairman Jerome Powell is expected to address the central bank’s annual symposium in Jackson Hole, Wyoming this week and shed some light on the pace of future interest rate hikes.

Powell could point to hawkish comments from Fed officials who have recently underlined their commitment to fighting inflation, even as investors enjoyed a summer rally partly on expectations of a less aggressive Fed.

Still, St. Louis Fed President James Bullard said in an interview last week with The Wall Street Journal that he was considering another 0.75 percentage point interest rate hike when the September meeting.

Check out CNBC Pro for more on what to expect from the Fed chair.

—Sarah Min

Futures open lower

Futures opened lower on Sunday evening. Dow Jones Industrial Average futures fell 94 points, or 0.28%. S&P 500 and Nasdaq 100 futures fell 0.36% and 0.69% respectively.

—Sarah Min