Budrigan review-US stock market falling due to tightening of Fed's policy

Budrigantrade.com - Monday saw a decline in U.S. stock indexes, with the S&P 500 on track to confirm a correction. Investors were already concerned about the Federal Reserve's aggressive policy tightening when the possibility of a Russian attack on Ukraine presented a double threat.

When an index closes 10% lower than its record closing level, a correction is confirmed. Since its record-breaking high on January 3, the S&P 500 index has lost 10.9%.

In early trading, all 11 major S&P sectors lost money, with nine of them losing more than 2%.

The small-cap Russell 2000 index, which is sensitive to the economy, lost 2.8%. The index is on track to confirm a bear market after falling as much as 20.3 percent from its peak on November 8.

As U.S. President Joe Biden considered options for increasing America's military assets in Eastern Europe to combat a buildup of Russian troops, the U.S. State Department announced on Sunday that it had issued an order for the families of diplomats to leave Ukraine.

One of the most obvious indications yet that American officials are anticipating an aggressive Russian move in the region was the order.

The CBOE Volatility index, which measures investor anxiety in U.S. markets, was last trading at its highest level since January 2021.

According to Darren Schuringa, chief executive officer of ASYMmetric ETFs in New York, "Ukraine clearly is a concern that's weighing on the markets today." Until there is some sort of resolution and more clarity regarding what the outcome looks like, this will continue to weigh on the markets for the foreseeable future."

The market will pay close attention on Wednesday to how worried the Fed is about rising inflation and how aggressively the U.S. central bank will try to control it. The Fed's policy meeting ends on Wednesday.

In addition to three additional rate increases by the end of the year, traders in Fed funds futures are fully pricing in a 25 basis point increase in March.

Stocks have had a rough start in 2022, with the Nasdaq index currently down 16% from its peak in November. This is because expectations of faster policy tightening prompted a rally in Treasury yields, which severely damaged Wall Street's growth stocks.

The Nasdaq Composite was down 439.17 points, or 3.19 percent, at 13,329.75, the S&P 500 was down 120.17 points, or 2.73 percent, and the Dow Jones Industrial Average was down 744.95 points, or 2.17 percent, at 33,520.42 at 10:20 a.m. ET.

Tesla, Inc. Among the mega-cap technology stocks, TSLA) Inc. lost the most money, falling 7.7%.

"There's room for continued and further corrections if you don't deliver the earnings to justify the valuation," Schuringa stated. "For many tech companies, multiples and valuations are certainly high in a lot of instances."

Kohl's Corp (NYSE: After Reuters reported that private equity firm Sycamore Partners is getting ready to make a bid for the American department store, KSS) saw a 31.6 percent increase. This came just days after a consortium supported by activist investment firm Starboard Value proposed a buyout.

On the NYSE, decliners outnumbered advancers 12.49 to 1, and on the Nasdaq, decliners outnumbered advancers 7.33 to 1.

The Nasdaq saw two new highs and 1,146 new lows, while the S&P index saw one new 52-week high and 27 new lows.