US stocks whip, investors worried about new China COVID-19 outbreak, Fed rate hikes

US stocks were choppy, moving between negative and positive territory early Tuesday as investors became anxious about a new COVID-19 outbreak in China, the war in Ukraine and the Federal Reserve’s plans to tighten monetary policy.

Ticker Security Last Change Change %
I: DJI DOW JONES On average 34308.08 -413.04 -1.19%
SP500 S&P 500 4412,53 -75.75 -1.69%
I: COMP NASDAQ COMPOSITE INDEX 13411.956315 -299.04 -2.18%

The S&P 500 fell 75.75 points, or 1.7%, to 4,412.53 on Monday, while the Dow Jones Industrial Average retreated 413.04 points, or 1.2%, to 34,308.08. The technology-heavy Nasdaq Composite fell 299.04 points, or 2.2%, to 13411.96.

Nasdaq’s fall is based on last week’s retreat of 3.9%, after Fed officials signaled their intention to raise borrowing costs and shrink the central bank’s balance sheet to curb inflation.

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Many tech stocks are valued based on expectations of growth well into the future and are therefore particularly sensitive to rising prices. As technology stocks continued to come under pressure on Monday, the S&P 500’s heavyweight technology sector lost 2.6% for the day.

China’s shutdowns in Shanghai and other industrial centers have begun to drag the country’s economy. Car sales have fallen, consumer prices have risen and economists have lowered growth forecasts. Restrictions to limit the proliferation of the Omicron variant have resulted in factory closures, further underscoring tight-knit global supply chains.

US stocks were choppy and moving between negative and positive territory early Tuesday, April 12, 2022, as investors became anxious about a new COVID-19 outbreak in China, the war in Ukraine and the Federal Reserve planning to tighten monetary policyx. (Courtney Crow / New York Stock Exchange via AP)

“Concerns about the COVID-19 situation linger,” AndersT Alves of ActivTrades said in a report. “Markets are looking at the situation in Ukraine for signs that could trigger further risk-off price action.”

Later Tuesday, the Ministry of Labor was to report consumer prices in March.

Investors are worried that inflation may be strong enough to encourage consumers to cut consumption, which is likely to mean a stronger-than-expected slowdown in economic growth.

Microsoft fell 3.9% and Apple fell 2.6%.

Investors expect a more aggressive shift from the Federal Reserve as it tries to curb rising inflation. The central bank has already announced an increase in the key interest rate by a quarter of a percentage point.

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Fed officials stated in the minutes of last month’s meeting that they were considering raising the US benchmark rate by twice the normal amount at future meetings. They also indicated that they would shrink the Fed’s bond portfolio, which would push up long-term borrowing rates.

Meanwhile, Asian stock markets were mixed on Tuesday as investors waited for US inflation data amid unrest over higher interest rates, Chinese efforts to curb coronavirus outbreaks and Russia’s war on Ukraine.

Shanghai and Hong Kong advanced while Tokyo and Seoul fell. Oil prices rose by more than $ 3 per barrel. barrel.

Oil prices have fallen back on Tuesday, April 12, 2022, due to expectations of weaker Chinese demand, after most companies in Shanghai were shut down and controls imposed on other industrial centers to limit coronavirus outbreaks. (David L. Nemec / New York Stock Exchange via AP / Associated Press)

The Shanghai Composite Index rose 1.5% to 3,213.33 after authorities announced it would ease anti-coronavirus control, shutting down most businesses in China’s most populous city and disrupting production.

Hang Seng in Hong Kong rose 0.9% to 21,400.40, while the Nikkei 225 in Tokyo fell 1.8% to 26,334.98.

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Kospi in Seoul gave up 1% to 2,666.76 and Sydney’s S & P-ASX 200 retreated 0.4% to 7,454.00.

India’s Sensex opened down 0.8% to 58,476.81. New Zealand and Southeast Asian markets declined.

Oil prices have fallen on the back of expectations of weaker Chinese demand, after most companies in Shanghai were shut down and controls imposed on other industrial centers to curb coronavirus outbreaks. Prices rose above $ 130 per barrel last month due to fears of possible disruptions to Russian supplies.

Automakers and other manufacturers in China are reducing production after authorities tightened restrictions to help stem coronavirus outbreaks in Shanghai and other cities.

Benchmark U.S. crude rose $ 3.07 to $ 97.36 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $ 3.97 on Monday to $ 94.29. Brent crude, the price base for international oil trade, added $ 3.03 to $ 101.51 per barrel in London. It dropped $ 4.30 the previous session to $ 98.48.

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The dollar rose to 125.59 Japanese yen from Monday’s 125.46 yen. The euro fell to $ 1.0859 from $ 1.0890.

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