Adding to the market’s woes is the falling British pound, as the Dow fell 100 points on Monday

Traders work on the floor of the New York Stock Exchange during morning trading on September 06, 2022 in New York City.

Michael M. Santiago | Good pictures

The Dow Jones industrial average fell on Monday as rising interest rates and foreign exchange volatility weighed on markets.

The Dow fell 76 points, or 0.3%. The S&P 500 rose 0.2%, and the Nasdaq Composite advanced 1.1%.

British pound It fell to an all-time low Monday against the US dollar. Sterling at one point fell 4% to an all-time low of $1.0382. The Federal Reserve’s aggressive hiking campaign combined with the UK’s tax cuts announced last week boosted the US dollar. The euro hit its lowest level against the dollar since 2002. A rising greenback could hurt the profits of US multinationals and wreak havoc on global trade.

“Such US dollar strength has historically led to some form of financial/economic crisis,” Morgan Stanley’s Michael Wilson wrote in a note on US equity strategy. “If ever there was a time to look for something to break, this is it.”

Traders will be closely watching the S&P 500 for any break below its bear market low on Monday. The S&P’s June low was 3,666.77. Friday closed at 3,693.23 after briefly trading below that level. The benchmark’s intraday low for the year is 3,636.87. Any trade below those levels will cause the market to oversold.

On Friday, stocks ended a brutal week with the blue-chip Dow Finds a new intraday low for the year and finished 486 points short. The broader S&P 500 temporarily broke below its June-end low, falling 1.7%. The tech-heavy Nasdaq Composite lost 1.8%.

Another super-sized rate hike by the Federal Reserve last week was the catalyst for the recent decline in markets. The central bank has hinted it could raise rates by as much as 4.6% before pulling back. The forecast shows the Fed plans to be aggressive this year, raising rates by 4.4% by the end of 2022.

Bond dividends rose after the central bank enacted another rate hike of 75 basis points. The 2-year and 10-year Treasury rates hit their highest levels in a decade. Friday, Goldman Sachs It lowered its year-end target S&P 500 to 3,600 to 4,300.

Rates rose again on Monday, with the 2-year Treasury at 4.29% at one point in the day.

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