By Yasin Ebrahim
Investing.com -- The Dow fell sharply Monday, as investor sentiment was hurt by Federal Reserve officials reiterating a stance for rates to remain higher for longer at a time when the impact of civil unrest in China stoked fears about slowing global growth.
The Dow Jones Industrial Average slipped 1.5%, or 497 points, the Nasdaq fell 1.6%, and the S&P 500 fell 1.5%,
Federal Reserve Bank of St. Louis President James Bullard said markets were “underpricing risk that the FOMC will have to be more aggressive rather than less aggressive in order to tame the substantial inflation in the U.S.”
Bullard has previously said the Fed may need to lift rates to within a 5% to 7% range. The remarks arrived on the heels of the comments from John Williams, president of the Federal Reserve Bank of New York, who echoed that inflation was “far too high.”
The remarks soured investor sentiment further, pushing the broader market deeper into the red following a tepid start to the week amid reports of social unrest in China over Covid restrictions.
“From an economic standpoint, China’s Zero-Covid policy has already had serious implications for growth,” Stifel said, citing China’s third-quarter economic growth of 3.9%, well below the official target of 5.5%.
Tech led the move lower, pressured by Apple (NASDAQ:AAPL) following reports that the tech giant could see production shortfall of six million iPhone Pro models because of the disruptions at supplier Foxconn in China.
Others on Wall Street also flagged concerns, with Wedbush estimating iPhone shortages that “could take off roughly at least 5% of units in the quarter and potentially up to 10% depending on the next few weeks in China around Foxconn production and protests.”
Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:META) fell more than 2%, while Alphabet (NASDAQ:GOOGL) slipped more than 1%.
Energy stocks also fell victim to reports of social unrest in China as oil prices fell on concerns about softening demand in China, the world’s top energy exporter.
EQT Corporation (NYSE:EQT), Pioneer Natural Resources (NYSE:PXD) , and Diamondback Energy (NASDAQ:FANG) were the biggest decliners in the energy sector.
Consumer stocks also ended the day in red, though losses were kept in check by rallying casino stocks including Wynn Resorts (NASDAQ:WYNN) and Las Vegas Sands (NYSE:LVS) after receiving provisional licenses from Chinese government to continue operating in Macau.
In other news, Taboola (NASDAQ:TBLA) surged nearly 40% after announcing Yahoo had taken a 25% stake in the advertising company as part of 30-year commercial agreement in which the company will provide native advertising services.