U.S. stock benchmarks were tumbling Monday, falling sharply as the downtrend that has pressured stocks this year picked up fresh momentum.
Investors are awaiting an important two-day meeting of the Federal Reserve, the first of the year, that is set to kick off on Tuesday, and could set the tone for the rest of what has been a brutal year for bullish investors.
- The Dow Jones Industrial Average DJIA, -2.92% fell 862.04 points, or 2.5%, to 33,403.33.
- The S&P 500 index SPX, -3.62% declined 3.1%, or 130 points, to 4,266, trading handily below the level that qualifies as a correction at 4,316.90.
- The Nasdaq Composite Index COMP, -4.45% was down 545.69points, or 4%, at 13,223.23.
On Friday, major indexes recorded their biggest weekly drops since 2020.
What’s driving markets
Markets were in freefall Monday, with early strength in U.S. stock futures on Sunday night giving way to persistent uncertainty and angst ahead of Wednesday’s Federal Open Market Committee decision and a wave of earnings reports.
“Uncertainty reigns following last week’s selloff and ahead of an extremely busy agenda this week,” said Pierre Veyret, technical analyst at ActivTrades.
Mark Hackett, chief of investment research at Nationwide, said that market was being driven lower by three areas of concern: 1) fundamental deterioration in corporate earnings; 2) investor fear over Fed policies and geopolitical tensions; 3) investor sentiment starting to crack as technical levels breakdown for equity benchmarks.
Indeed, the S&P 500 was in jeopardy of falling into correction, commonly defined as a drop from a recent peak of at least 10%, for the first time since Feb. 27, 2020, according to Dow Jones Market Data.
Meanwhile, other key assets were sinking, with Netflix NFLX, -10.81% shares down 10% after swooning on Friday, contributing to investor concerns about corporate earnings and the economic outlook. “A disappointing start to the earnings season is not helping, despite a superficially impressive EPS beat rate of 77% so far,” said Ian Williams, strategist at U.K. broker Peel Hunt.
The political environment also is a question mark with U.S. and European diplomats meeting on how they can respond to the threat posed by Russia to Ukraine. The Russian ruble RUBUSD, -2.16% fell on Monday to the weakest level in more than a year.
Cryptocurrency developments also were in the spotlight, after bitcoin BTCUSD, -2.36% fell as much as 50% below its record high over the weekend.
Which companies are in focus?
- Shares of electric-vehicle maker Tesla Inc. TSLA, -8.83% were down nearly 7%, with the company run by Elon Musk set to report corporate results on Wednesday.
- Shares of retailer Kohl’s Corp. KSS, +31.80% was in focus after a group backed by activist hedge fund Starboard Value offered roughly $9 billion to buy the department store chain.
- Shares of Macy’s Inc. M, +7.17% and Nordstrom Inc. JWN, +3.00% rose in sympathy after the news of activistism focused om Kohl’s.
- Shares of Goldman Sachs Group Inc. GS sank $13.43, or 3.4% Monday, enough to pace the 28-of-30 Dow components that were losing ground, and putting them on track to close at a nine-month low.
- GameStop’s stock GME, -17.91% slumped 14% in Monday’s action, after bouncing 3.6% on Friday to snap an eight-day losing streak, while shares of AMC Entertainment Holdings Inc. AMC sank 15.4%, putting them on track to suffer an eighth straight decline.
- U.S.-listed shares of AstraZeneca AZN were down 5.3% Monday after the company said it received an orphan-drug designation for its experimental treatment for transthyretin-mediated amyloidosis, a rare condition that causes heart failure and death within years of diagnosis.
- Shares of MicroStrategy Inc. MSTR tumbled over 12% toward a more than two-year low Monday, as the enterprise software company and bitcoin play continues to suffer from the broad selloff in cryptocurrencies.
- Shares of Halliburton Co. HAL declined 2% Monday, even after the oil-services company swung to a fourth-quarter net profit and reported revenue that rose above forecasts and boosted its quarterly dividend by 167%.
- Merck & Co. Inc.’s stock MRK lost 2.8% after the company said the Food and Drug Administration requested additional information about its experimental cough treatment.
How are other assets faring?
- The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.4%.
- Gold futures GC00 inched up 0.1% to $1,833.60 an ounce on Monday, after marking a weekly gain of 0.8% on Friday, and crude-oil prices retreated, with U.S. crude CL00 down 2.6% at $82,89 a barrel on the New York Mercantile Exchange.
- The Stoxx Europe 600 SXXP traded 3.8% lower, while London’s FTSE 100 UKX closed 2.6% lower on Monday.
- The Shanghai Composite SHCOMP ended fractionally higher; China’s CSI 300 000300 closed up 0.2%, the Hang Seng HSI, -1.24% fell 1.2% in Hong Kong, and Japan’s Nikkei 225 NIK edged up 0.2%.