On Wednesday, US stocks finished the month with a fourth consecutive daily loss, confirming their worst August performance in seven years as concerns over the Federal Reserve’s aggressive interest rate hikes persist.
Declines in the technology industry, and more notably chipmakers, due to gloomy projections from Seagate and HP Inc., added to the pressure.
In August, the three major indices experienced their largest monthly percentage falls since 2015. The S&P 500 has struggled recently after reaching a four-month high in mid-August. It has fallen through multiple closely watched technical support levels and has lost more than 8% of its value as of Wednesday’s closing.
With the benchmark index down more than 5% over the past four trading days, selling pressure has increased after Fed Chair Jerome Powell’s hardline comments on Friday about keeping monetary policy tight “for some time” shattered prospects of more gradual interest rate hikes.
According to Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York, New York, “all (Powell) cares about is getting inflation down and rising rates to do that, and in terms of how aggressive to be that, that is all to be determined from the data.”
There is a lot of volatility in the market right now, concerns that the recent rise was only a bear market rally, and even some worry that we will drop to new lows.
President of the Cleveland Federal Reserve Bank Loretta Mester stated on Wednesday that the prospects of a recession over the next year or two have increased and that the Fed will need to raise interest rates to a level slightly above 4% by early next year and maintain them there.