Band Stephen Culp
NEW YORK, March 21 (Reuters) – Wall Street closed lower on Monday, with stocks extending their slide after U.S. Federal Reserve Chairman Jerome Powell hinted at a more aggressive-than-expected monetary policy tightening, adding to uncertainties over Russia’s invasion of Ukraine.
While the three major U.S. stock indices finished well off session lows, they posted four-session winning streaks on the heels of their biggest weekly percentage gains since early November 2020.
The central bank must act “quickly” to fight inflation, Powell told the National Association for Business Economics conference, adding that larger than usual interest rate hikes could be rolled out if needed.
“A lot of today’s news was telegraphed last week in (Powell’s) comments,” said Matthew Keator, managing partner of Keator Group, a wealth management firm in Lenox, Massachusetts. “The difference is that there was a question as to whether a 50 basis point rate hike might be a course of action sooner rather than later.”
Fed funds futures now imply a 60.7% chance of a 50 basis point hike in key interest rates at the Fed’s next meeting in May, up from 52% before the text was released of Powell’s speech.
“Some Fed governors have spoken out on the initial loading of some of these hikes, putting them on the books as soon as possible,” Keator added. “But I don’t think the markets should be pricing in a series of 50 basis point rate hikes by the end of the year.”
Fighting raged in Ukraine as efforts to negotiate an end to the conflict appeared to make little progress.
Crude price CLc1 continued to rise as the European Union considered joining the United States in banning Russian oil WHEREwhich raised supply issues and helped put energy shares .SPNY in the front.
The Dow Jones Industrial Average .DJI fell 201.94 points, or 0.58%, to 34,552.99, the S&P 500 .SPX fell 1.94 points, or 0.04%, to 4,461.18 and the Nasdaq Composite .IXIC fell 55.38 points, or 0.4%, to 13,838.46.
Six of the 11 major sectors of the S&P 500 ended the session in the red, with the communication services .SPLRCL suffering the greatest percentage of loss. Energy was the big winner, gaining 3.8% on the day.
Boeing Co stock TO FORBID fell 3.6% after one of its 737-800 planes operated by China Eastern Airlines 600115.SS crashed in southern China with no apparent survivors.
Rising geopolitical temperatures helped defense actions. Despite Boeing’s pullback, the S&P 500 Aerospace and Defense Index .SPLRCAED grew by 1.5%, with Lockheed Martin LMT.NRaytheon RTN.NNorthrop Grumman NOC.N and general dynamics GD.N increasing between 2.5% and 4.6%.
A Moscow court named Meta Platforms Inc FB.O an “extremist organization”, confirming a decision to ban Facebook in Russia. Shares of Meta fell 2.3%.
Alleghany Corp WE jumped 24.8% after Warren Buffett’s Berkshire Hathaway Inc BRKa.N reached an $11.6 billion deal to buy reinsurer owner TransRe.
Shares of Nike Inc. NKE.N rose more than 4% in after-hours trading after the company beat quarterly revenue estimates.
Falling issues outnumbered rising ones on the NYSE by a ratio of 1.50 to 1; on the Nasdaq, a 1.70-to-1 ratio favored decliners.
The S&P 500 posted 37 new 52-week highs and no new lows; the Nasdaq Composite recorded 52 new highs and 49 new lows.
Volume on U.S. exchanges was 12.82 billion shares, compared to an average of 14.65 billion over the past 20 trading days.
(Reporting by Stephen Culp in New York Additional reporting by Devik Jain and Bansari Mayur Kamdar in Bengaluru Editing by Arun Koyyur and Matthew Lewis)
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