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S&P 500 on pace for 2022 closing low, Fed officials weigh challenges amid rate hikes

Yahoo Finance Live examines sliding market performances, as well as looking at the euro's position in currency markets, sector losses, and Fed officials' employment and economic concerns amid rate hikes.

Video Transcript

SEANA SMITH: We are seeing selling here in the Dow and the S&P. Dow just off the lows of the day. You can see a little pop there, now off just around 231 points. S&P moving to the downside once again, off another 6/10 of a percentage point today. Just off the lows of the day, but still on track to close at a new low for the year. The NASDAQ just popping back into negative territory shortly before we came on air. You can see the NASDAQ up just about a tenth of a percent.

But what's really driving today's action, a lot of it has to do with what's playing out in the currency market. Once again, the strong dollar here, a big mover here for the broader markets. You can see the US dollar index rising once again now, just above 114. The euro falling to its lowest level against the dollar in about 20 years since 2002. You can see the move lower this afternoon. Also the British pound falling to an all-time low against the US dollar.

Taking a look at some of the action in the Treasury markets, yields continuing that move higher. Taking a look at an intraday basis, it did top 3.9 in earlier trading here, now up just around 18-- let's see, just, yeah, right around a 3.88 here. So an interesting move here for the 10-year. Taking a look at the sector action this afternoon, only two sectors staying in positive territory. We have consumer discretionary and consumer staples. On the lagging side of it, utilities and real estate the worst performers here.

I also want to pull up the banks because banks, you would think, typically do well in a rising rate environment. That certainly has not been the case this year. It's not the case today. You can see red pretty much across the board-- JP Morgan, Bank of America, Morgan Stanley, Wells Fargo. Some of those larger cap names here leading the decline. Goldman one of the worst performers of the group today, off just over 2%. Rachelle.

RACHELLE AKUFFO: All right, well, Seana, let's get you up to speed now what's been happening with this week's Fed speak. Now a number of Fed presidents are weighing in off to that jumbo 75 basis point hike. And that, of course, hawkish tone from the central bank really rattled markets.

We heard from Boston Fed President Susan Collins, who talked about slowing the interest sensitive components of demand, saying returning the markets for goods, services, and labor to a more stable balance is how monetary policy lowers inflation back to that 2% target. But here's what she said about the implications for the labor market.

SUSAN COLLINS: I do anticipate that accomplishing our price stability goal will require slower employment growth and a somewhat higher unemployment rate. And I take very seriously that unemployment is painful and that its costs have disproportionately been concentrated among groups that have traditionally been marginalized.

RACHELLE AKUFFO: Meanwhile, Atlanta Fed President Raphael Bostic said in the last 10 years, the Federal Reserve has been a little too aggressive in slowing growth out of fear that the economy will overheat. Well, as rising rates push up the US dollar, as Seana was just mentioning, he also talked about contagion from Europe, as European Central Bank President Christine Lagarde said Europe's economic outlook is darkening.

RAPHAEL BOSTIC: The trade with Europe is incredibly important for our economic performance. And if that gets weaker, that puts more stress on us.

RACHELLE AKUFFO: Now the markets will have more to digest when Fed Chair Powell gives his speech on Wednesday morning. So we'll be keeping an eye on that for you.