(AP) – Stocks fell broadly in afternoon trading on Wall Street Monday, extending market losses amid worries about inflation and the path ahead for the economy.
The S&P 500 shed 2.1% Monday, its biggest drop since mid-June. Some 95% of stocks in the benchmark index lost ground. It ended in the red last week, breaking a winning streak of four weeks.
The Dow Jones Industrial Average fell 649 points, or 1.9%, to 33,058 and the Nasdaq fell 2.5%.
Tech companies and retailers bore some of the heaviest losses. Microsoft fell 2.9% and Target fell 3%.
Signify Health soared after The Wall Street Journal reported that Amazon would bid for the company. Investors are looking forward to this week’s Federal Reserve conference.
Cinema operators were volatile following that report Cineworld This is considering filing for Chapter 11 bankruptcy protection. The industry is still struggling to recover from the virus pandemic. AMC Entertainment fell 3.4% in choppy trade. Cinemark dropped 4.6%.
Bright spots in the market include Signify Health, which jumped 32.4% after The Wall Street Journal reported that Amazon would bid for the company.
Shares of smaller companies also fell, sending the Russell 2000 index 2.2% lower.
Bonds yield soil. The yield on the 10-year Treasury, which affects home mortgage rates and other loans, rose to 3.04% from 2.97% late Friday.
The market’s bigger losses came after a weeks-long rally. Investors are trying to figure out where the economy goes from here as stubbornly hot inflation hurts businesses and consumers. Record-high inflation also has investors focusing on central banks and their efforts to combat high prices without further damaging economic growth.
“You’ve had a rally and there’s reason to be unsure where we go from here,” said Tom Martin, senior portfolio manager with Globalt Investments. “There is still considerable potential for a recession.”
Last week’s minutes from the July Federal Reserve board meeting Affirmed plan to rise further despite signs of weaker economic activity. Traders worry aggressive steps to slow the economy could go too far and lead to a recession. The US economy has contracted in the first half of 2022 and Wall Street will get more information on Thursday when the government releases an updated report on the US economy for the second quarter.
Investors are also looking to the Federal Reserve conference this week for a signal on the possibility of a US interest rate hike to cool surging inflation. The central bank held its annual meeting in Jackson Hole, Wyoming on Thursday. Fed Chair Jerome Powell is scheduled to give a speech on Friday morning.
The Fed held its meeting after a heavy week of corporate and economic data that showed inflation was still accelerating the economy, but consumer spending remained resilient. Falling prices for gasoline and food commodities, for wheat and corn, have helped alleviate some of that pressure. That helped the stall before the inflation in July, although the price still remains stubbornly high.
“I don’t think we’re out of the woods yet on inflation,” said Martin. “We still don’t know how inflation will come out and what the Fed will do.”