The S&P 500 index rose Monday, but January was its worst month since March 2020. Expectations about interest rate hikes hit stock demand.
The S&P 500 was down 5.3 percent in January.
Traders are trying to gauge how fast the Federal Reserve can raise interest rates in response to inflated inflation and a tight labor market.
The Fed signaled last week that it would begin raising interest rates in mid-March to fight inflation. The expected move away from extremely low rates has undermined for many investors the appeal of expensive company stocks that promise strong future growth, Prime writes.
The S&P 500 rose 83.70 points, or 1.9 percent, to 4,515.55 points in Monday trading. The Dow Jones Industrial Average rose 406.39 points, or 1.2 percent, to 35131.86 points. The Nasdaq Composite rose 469.31 points, or 3.4 percent, to 14239.88 points.
Some investors worry that tighter monetary policy, which supported the economy during the pandemic, will put pressure on the technology sector.
“Volatility has reached extreme levels this year,” commented Louise Dudley, equity portfolio manager at Federated Hermes. – Market participants are especially wary of the continued strengthening of expectations for higher interest rates. U.S. inflation rates have definitely reached extremely high levels, and the authorities will do everything in their power.”
Dudley expects volatility to subside as investors get more information on whether inflation has peaked and what impact companies anticipate from higher energy, labor and materials prices. Otis Worldwide and L3Harris Technologies are expected to report their results today before trading begins.
The yield on 10-year U.S. government bonds rose from Friday’s 1.779% to 1.780.
