US stocks fall sharply on higher rate concerns
Wall Street stocks dropped Monday after better-than-expected US services data added to worries that the Federal Reserve will prolong its aggressive policies to counter inflation. The Institute for Supply Management's services index rose to 56.5 percent last month, well above the 50-percent threshold indicating growth and pointing to strong business activity despite efforts to cool the economy. The report comes on the heels of Friday's employment data, which also topped estimates. The latest economic reports show "some pretty considerable resilience," said Art Hogan, analyst at B. Riley Financial. While markets continue to bet on a more modest Fed interest rate hike later this month, traders now see the central bank lifting its rates to a higher "terminal" level when the cycle of increases is complete, Hogan said. The Dow Jones Industrial Average finished down 1.4 percent at 33,947.10. The broad-based S&P 500 shed 1.8 percent to 3,998.84, while the tech-rich Nasdaq Composite Index dropped 1.9 percent to 11,239.94. Monday's losses came after a strong day on Asian equity markets following signs that officials in Beijing and throughout China began easing some pandemic restrictions. But Hogan said a China comeback would "bring more demand into the commodity complex, which could be inflationary." Among individual companies, Tesla sank 6.4 percent following a Bloomberg report that the company is cutting production at its Shanghai plant. VF Corporation slumped 11.2 percent after announcing that Steve Rendle had retired as chief executive and that it has commenced a search for a new leader. The company, the owner of Timberland and other activewear brands, also lowered its forecast in light of a heavily promotional shopping environment.