February 2, 2023

Stocks fall on the second day due to US-China tensions, hawkish statements from Fed leaders

Stocks fall on the second day due to US-China tensions, hawkish statements from Fed leaders

Stocks fell on Tuesday as investors weighed in on rising US-China tensions with House Speaker Nancy Pelosi’s visit to Taiwan and her reaction to Fed chairs’ comments about the central bank’s path forward.

The S&P 500 fell 0.67% to 4,091.19, after falling nearly 1% earlier in the session. The index had earlier jumped from its lowest level Pelosi’s plane landed safely in Taiwan Tuesday morning. The Dow Jones Industrial Average also fell 402.23 points, or 1.23%, to 32,396.17. Larva Weight on the 30-share index, and shares fell after the company declinedDisappointing quarterly earnings show. The Nasdaq Composite Index fell 0.16% to 12348.76, although Uber jumped 18.9% after earnings.

Stocks wobbled in the early afternoon, in response to multiple comments from regional Federal Reserve chiefs who all threw cold water on the idea that the central bank would finish raising or lowering interest rates anytime soon.

Chicago Fed President Charles Evans said that Hope the central bank can increase The benchmark interest rate increased by half a percentage point in September and then continues to rise by a quarter of a point until the start of the second quarter in 2023. San Francisco Fed President Mary Daly said the central bank still has work to do in the future to combat inflation.

Later, Loretta Meester, president of the Federal Reserve Board of Cleveland, said that Several more months of evidence There will be a need for inflation to have peaked before the central bank can finish its rate-raising cycle.

In political news, Pelosi is expected to spend the night in Taiwan, Reuters reports. Prior to the trip, Chinese officials had threatened action if Pelosi went ahead with the visit. Pelosi is the most senior US official to meet Taiwan’s leaders on the island since former House Speaker Newt Gingrich visited in 1997.

“I think the trip won’t lead to any real economic disruption, but of course the rhetoric and headlines intensify and that’s something we need to follow in the future,” Mona Mahajan, chief investment analyst at Edward Jones, said on CNBC. Squawk Fund Tuesday. “Geopolitical tension has been a topic that we’ve really seen all year long and has been weighing on the markets.”

Merchants are also looking forward to another batch of earnings from companies like Starbucks, PayPal and Advanced Micro Devices on Tuesday after the bell. On the economic data front, investors this week Awaiting the non-farm payrolls report for the month of July It is due to be released on Friday for more clues about the state of the economy and the labor market.