Wall Street plunges amid fears that China will implement strict COVID policies
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The main indexes on Wall Street plunged on Monday amid fears that China could resume strict COVID policies amid a new wave of infections. On Monday, China said it would shut down schools and businesses in the affected districts while tightening the rules for those entering the city
Wall Street trades lower
Carol Schleif, the deputy chief investment officer at the BMO Family Office, said there was fear that China would reintroduce the restrictive COVID policies they had started to lift. Some of the Casino businesses in China saw their stocks drop around 2%.
The Dow Jones Industrial Average closed Monday at 0.31% lower. The S&P 500 index dropped 0.39%, while the Nasdaq Composite index dropped 1.09%. Trading volumes were also low on Monday, and there were more likely to drop, increasing market volatility.
Trading volumes on US exchanges came to 9.43 billion shares compared to the 11.88 billion average during full trading sessions in the last 30 days. the lead portfolio strategist and portfolio manager at Natixis investment Managers Solutions admitted that investors were concerned about the rise in COVID cases.
Interest rate hikes are still a concern
Stocks trimmed losses after the San Francisco Federal Reserve President, Mary Daly, said that officials needed to ensure no “painful downturn.” Similar remarks were shared by the Cleveland Fed President, Loretta Mester, who said she supports a smaller interest rate increase in December.
The S&P 500 energy sector index also declined around 3% on Monday to the lowest level in four weeks as oil prices declined by over 5% amid reports that Saudi Arabia and other oil producers in the OPEC region would discuss an increase in output. The index also counted losses after Saudi Arabia shut down talks.
Energy is the only leading S&P 500b sector that is eyeing yearly gains of around 63%. The S&P 500 continued its decline from last week after Fed officials said that interest rate hikes could continue until inflation was under control. Investors are now waiting to release the details of the Fed November meeting.
Traders are expecting that the Fed will slow down the interest rate hikes. The majority opinion is that the Fed will increase rates by only 50 basis points in December, with a peak in rates expected in June.
