Shares on Wall Street fell on Monday as investors braced for the start of another U.S. corporate earnings season amid increasingly bleak economic conditions.
The broad gauge S&P 500 was down 0.4% in the afternoon in New York.
The tech-focused Nasdaq Composite index was 0.6% lower, with the Philadelphia Semiconductor index falling more than 4% after Washington launched new export controls to curb self-sufficiency plans technology from Beijing. The restrictions limit sales of semiconductors made with US technology, unless sellers obtain an export license.
Declines in US stocks on Monday followed a sell-off on Wall Street in the previous session. The S&P closed down 2.8% on Friday after a labor market report indicated continued strong job growth.
That data has been scrutinized in recent months for clues about how aggressively the Federal Reserve will raise interest rates, with signs of continued strength in the labor market fueling expectations of monetary policy tightening. .
Monday’s downbeat trading activity also preempted a flurry of third-quarter corporate earnings announcements, with Wall Street banks poised to lead the charge.
Investors will scan corporate financial statements for evidence of stress from stubbornly high inflation and rising borrowing costs, as fears intensify this year that central banks could hike interest rates into a recession, putting businesses in many sectors under even more pressure.
U.S. inflation data on Thursday will also shed light on the effectiveness of the Fed’s tightening efforts after the central bank raised interest rates by 0.75 percentage points in three straight meetings. A Reuters poll puts the consumer price index for the world’s largest economy at 8.1% for September on an annual basis, down from 8.3% in August.
The US Treasury market was closed Monday for a public holiday. UK government bonds came under heavy pressure across all maturities, even after the Bank of England announced measures to ease strains on UK pension funds, including increased purchase limits in the under its emergency gilt purchase program.
The central bank had stepped in to dampen volatility in government securities trading after the UK government’s ‘mini’ budget last month triggered historic swings in debt prices, especially longer-dated bonds. . The initiative is due to end on Friday.
The 10-year UK government bond yield added 0.22 percentage point on Monday to 4.46%, while the 30-year yield added 0.29 percentage point to 4.68%. Bond yields rise as their prices fall.
“There is a lot of attention that gilt buying will indeed end at the end of this week,” said Antoine Bouvet, rates strategist at ING. “The underlying fear is that the facility has not been used much by pension funds – there are fears that there will be no further selling once the buying is complete.”
Elsewhere in the equity markets, the European Stoxx 600 ended the day down 0.4%. Hong Kong’s Hang Seng had previously closed 3%, while the Chinese mainland’s CSI 300 gauge fell 2.2%. Overall, Chinese chipmakers lost $8.6 billion in market value on Monday after Washington announced its new export controls.
Additional reporting by Hudson Lockett in Hong Kong