The S&P 500 fell 1.9 per cent, the Dow Jones Industrial Average slipped 1.4 per cent and the Nasdaq fell 2.1 per cent
The S&P 500 slumped Monday as further data pointing to further signs of inflation pressures weighed on sentiment ahead of the Federal Reserve’s meeting next week.
The S&P 500 fell 1.9 per cent, the Dow Jones Industrial Average slipped 1.4 per cent, or 472 points, and the Nasdaq fell 2.1 per cent.
Services activity, which has been an area of the economy flagged by the Fed as a key contributor to inflation, rose by more than expected in November, stoking fresh concerns about more hawkish Fed monetary policy measures.
ISM services data for November showed a jump to 56.5, well above expectations of 53.3, while prices paid index component of the report, a gauge of inflation, ‘remains sticky at a very high level,’ Jefferies said in a note.
The Fed is expected to slow the pace of interest rates at its meeting next week, but recent data including the red-hot jobs report on Friday shows that ‘they are going to have to hold rates at a high level (sufficiently restrictive) for quite a while to get inflation back down to the 2 per cent target, Jefferies added.
Treasury yields rose as investors weigh up the prospect of higher for longer interest rates to bring down inflation, pressuring growth sectors of the market including tech and consumer stocks.
Tesla fell 5 per cent as the electric vehicle company is reportedly set to cut production of its Model Y vehicle by more than 20 per cent at its Gigafactory in Shanghai.
VF Corporation also dragged consumer stocks lower after tumbling more than 8 per cent as it warned on profit for the second half of the year and announced that its chief executive was departing.