NEW YORK, New York - Stocks fell sharply on Monday after a warning by the head of the U.S. Federal Reserve that interest rates could be raised more aggressively if necessary.
The labor market is very strong and inflation is much too high, said Jerome Powell, Fed Chair at the National Association for Business Economics conference on Monday. He said that there is a need to move quickly to return the stance of monetary policy to a more neutral level, and then to more restrictive levels if that is what is needed to restore price stability.
The war in Ukraine that appeared last week to be nearing an end as the talks between Russia and Ukraine showed signs of a possible truce. The optimism for a breakthrough has faded as the new week begins.
The market is digesting the effects of tighter financial conditions, higher oil prices and continued geopolitical uncertainty against a backdrop of growth, at least in the U.S. Erin Browne, a portfolio manager for multi-asset strategies at PIMCO in Newport Beach, California, was quoted by Reuters as saying in an email Monday.
The Dow Jones Industrial Average was down 201.94 points, or 0.58%, to close Monday at 34,552. The Standard and Poor's 500 was down 1.94 points, or 0.040%, to 4,461. The Nasdaq Composite fell 55.38 points, or 0.40%, to 13,838. The U.S. dollar was mixed but little changed. The euro was at 1.1017 by the close of New York on Monday. The Japanese yen was weakened to 119.47. The Swiss franc was close to 0.9335.
The Canadian dollar was up to 1.2593. After hitting a earlier intraday high of 0.7425, the Australian dollar fell to 0.7397. The New Zealand dollar fell to 0.6886.
Germany's Dax fell by 0.60 percent over the course of the day. The CAC 40 in Paris, France was sluggish by 0.57 percent. Conditions were more favorable in London. The FTSE 100 went up 0.51 percent.
The Nikkei 225 advanced by 174.53 points or 0.65 percent to 26,827 in Japan. The Australian All Ordinaries fell by 12.30 points or 0.16 percent to 7,558. China's Shanghai Composite barely moved, adding just 2.61 points or 0.08 percent to 3,353. The S&P NZX 50 in New Zealand went up 1.90 points or 0.02 percent to 12,177. The Kospi Composite in South Korea fell 20.93 points or 0.77 percent to 2,686. The Hang Seng in Hong Kong finished down 191.06 points or 0.89 percent at 21,221.