By Yasin Ebrahim
Investing.com — The S&P 500 fell Monday, weighed down by Federal Reserve officials who reiterated the need for higher rates for longer at a time when civil unrest in China amid increased Covid soured sentiment on stocks.
The S&P 500 fell 1.5%, the Dow Jones Industrial Average slipped 1.4%, or 466 points, and the Nasdaq 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 move rates to within a 5 to 7% range. The remarks arrived on the heels of the comments from the 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.
In other news, Taboola 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.