By Damian J. Troise and Alex Veiga
Stocks capped a day of choppy trading on Wall Street with a modestly lower finish Monday, giving back some of their recent gains after the major indexes notched their best week in more than a year.
The S&P 500 slipped less than 0.1% after giving up an early gain and bouncing around for much of the day. The Dow Jones Industrial Average fell 0.6%, while the Nasdaq composite slid 0.4%.
The indecisive trading came a day after the market posted its best week since November 2020 and as Federal Reserve Chair Jerome Powell said the central bank was prepared to move more aggressively if need be to contain inflation.
Bond yields rose sharply following Powell's remarks. The yield on the 10-year Treasury jumped to 2.30% from 2.14% late Friday.
“Powell’s comments and the bond market’s reaction to that put some pressure on the stock market today,” said Willie Delwiche, investment strategist at All Star Charts.
The S&P 500 fell 1.94 points to 4,461.18, snapping a four-day winning streak for the benchmark index. The Dow dropped 201.94 points to 34,552.99, and the Nasdaq slid 55.38 points to 13,838.46.
Smaller company stocks fared worse than the broader market. The Russell 2000 index lost 20.21 points, or 1%, to 2,065.94.
In remarks at the National Association of Business Economists, Powell said the Fed would raise its benchmark short-term interest rate by a half-point at multiple Fed meetings, if necessary, to slow inflation. The Fed hasn’t raised its benchmark rate by a half-point since May 2000.
Last Wednesday, the central bank announced a quarter-point rate hike, its first interest rate increase since 2018. Stocks rallied after the announcement and went on to have their best week in more than a year. The central bank is expected to raise rates several more times this year.
Before Russia's invasion of Ukraine added a new wave of global economic uncertainty to the mix, some Fed officials had said the central bank would do better to begin raising rates by a half-point in March. Because Powell is now floating the possibility of a half-point increase, that could signal that such a move is on the table again.
“When the chairman says it, it kind of solidifies it," Delwiche said.
Retailers and other companies that rely on consumer spending, and communication and technology stocks, were the biggest drag on the S&P 500 Monday. Home Depot slid 3.3%, Facebook parent, Meta Platforms, fell 2.3%, and Microsoft fell 0.4%.
Energy stocks made solid gains as oil prices gained ground. U.S. benchmark crude oil jumped 7.1% to settle at $112.12 per barrel, while Brent, the international standard, climbed 7.1% to settle at $115.62. Exxon Mobil gained 4.5%.
Investors face a fairly quiet week without much economic data to give them a better sense of how companies and investors are dealing with rising inflation.
The Fed's move to raise interest rates had been expected for months as supply chain problems brought on by surging demand pushed prices of everything from food to clothing higher. That has raised concerns that consumers might eventually curtail some spending, which could prompt a more severe economic slowdown than analysts anticipate.
Russia's invasion of Ukraine added to concerns that inflation could worsen by pushing energy and commodity prices higher. Oil prices are up more than 45% this year and prices for wheat and corn have also surged.
Outside of those broader concerns, several stocks made big moves on company-specific news. Alleghany, a reinsurance company, soared about 25% after agreeing to be bought by Warren Buffett’s Berkshire Hathaway. Media ratings agency Nielsen slid 6.9% after rejecting an acquisition offer.
Boeing fell 3.6% after one of its planes crashed in China with 132 people on board.
Updated on March 21, 2022, at 5:53 p.m. ET.
