Apple shares plunged 2.7% after its supplier Hon Hai Precision Industry Co Ltd, known as Foxconn, suspended operations in Shenzhen, China, amid rising coronavirus cases.
Markets expect the Fed to raise interest rates on Wednesday for the first time since December 2018 in an effort to combat rising inflation. It is worth noting that higher interest rates are negative for technology and growth stocks because their valuations are more dependent on future cash flows.
“We’re seeing that rotation toward value and away from growth, and a lot of that is related to what’s happening with interest rates,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. “Equity markets are going to be challenged in the future, and today is another example of that.”
The technology and consumer discretionary sectors were among the biggest drags on the S&P 500, which fell 0.8% to 4,172.46 on Monday. Meanwhile, the Dow Jones Industrial Average was almost flat at 32,939.51 units.
Energy stocks were also hit as Brent crude slipped below $110 a barrel, a week after it spiked as high as $139 due to the Ukraine crisis.
Developments in the Ukraine-Russia conflict added to investor caution as delegations from both countries held a fourth round of talks earlier today, but no breakthrough was announced, while Russian forces allowed a first convoy of vehicles escape from the besieged Ukrainian port of Mariupol.
Source: Ambito
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