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Investing.com — U.S. stock markets started the week with a fresh lurch to the downside as fears about rising interest rates and weaker corporate profits combined to unsettle investors.
By 9:40 AM ET (1440 GMT), the Dow Jones Industrial Average was down 282 points, or 0.8%, at 35,949 points, while the S&P 500 was down 1.3% and the Nasdaq Composite was down 1.9%.
Fear of inflation – and of an aggressive tightening of policy by the Federal Reserve to stop it – was primarily responsible for the move. Having had the weekend to digest an employment report that showed inflationary pressures continuing to build up in the form of higher wages and a rapidly-evaporating pool of spare labor. Analysts at Goldman Sachs (NYSE:GS) revised their forecasts in response to say that they now expect the Fed to raise rates four times this year, and to start selling down its massive portfolio of bonds as early as July.
In addition, there were signs of sustained supply chain issues eating into corporate profits, as yogawear maker Lululemon Athletica Inc (NASDAQ:LULU) said its holiday season sales had disappointed. Lululemon stock fell 4% to its lowest since June. However, it remains firmly in the category of companies most at risk from the rising interest rate trends. The stock was still trading at 53 times trailing earnings at Friday’s close, despite already coming off its peak by more than 25%.
