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Markets

Dow drops 600 points, S&P 500 and Nasdaq fall in big-cap sell-off

Apple drops 3%, weighing down U.S. stock indices

A trader works on the floor of the New York Stock Exchange on May 9.   © Reuters

NEW YORK (Reuters) -- The S&P 500 ended below 4,000 for the first time since March 2021 and the Nasdaq dropped more than 4% on Monday in a sell-off led by mega-cap growth shares as investors grew more concerned about rising interest rates.

The Nasdaq closed at its lowest level since November 2020. Apple shares dropped 3.3% and were the biggest weight on the Nasdaq and the S&P 500.

Investors are worried about how aggressive the Federal Reserve will need to be to tame inflation. The U.S. central bank last week hiked interest rates by 50 basis points.

Benchmark 10-year U.S. Treasury yields hit their highest levels since November 2018 early in the session.

"Markets are digesting the start of a return to a more normal monetary policy environment," said Kristina Hooper, chief global market strategist at Invesco in New York.

"Moving more aggressively [on rates] raises the specter of a recession, especially with all of these complications -- high inflation, Russia's invasion of Ukraine, COVID-related supply chain disruptions," she said.

Investors have also been worried about an economic slowdown in China following a recent rise in coronavirus cases.

The Dow Jones Industrial Average fell 653.67 points, or 1.99%, to 32,245.7, the S&P 500 lost 132.1 points, or 3.20%, to 3,991.24 and the Nasdaq composite dropped 521.41 points, or 4.29%, to 11,623.25.

Among the hardest hit in the recent sell-off have been technology and growth stocks, whose valuations rely more heavily on future cash flows.

The energy sector sector retreated 8.3% as oil prices dropped.

Twitter shares fell more than 3% as Hindenburg Research took a short position on the social media company's stock, saying the company's $44 billon deal to sell itself to Elon Musk has a significant risk of getting repriced lower

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