The Dow finished Monday down nearly 185 points, or 0.6%. The index closed well off its lows of the day and even briefly moved into positive territory at one point. But investors continue to worry that the Federal Reserve is going to keep raising interest rates sharply.
Some think that the impact of the Fed’s future rate hikes may now be factored into the market. Even if the economy slows, earnings growth could still be decent, albeit not spectacular.
“The pain Powell predicted for businesses and consumers will be real, but modest equities gains can be fueled by slowing earnings growth in the mid-single digits,” said Robert Teeter, managing director with Silvercrest Asset Management, in a report.
But investors are clearly growing nervous again and are starting to shun riskier assets. Along those lines, bitcoin prices briefly fell below $20,000, hitting their lowest levels since mid-July.
The change in sentiment on Wall Street has been sharp and sudden.
Investors are once again considering all the risks in the market and global economy. It’s not just inflation after all.
“Uncertainty remains high over the course of inflation, energy prices, the war in Ukraine, and economic policy in China, so investors should remain alert to the risk of more adverse scenarios,” Mark Haefele, chief investment officer at UBS Global Wealth Management said in a report. “We see this as a time to be selective.”