Wall Street tumbles as worries mount

Fed’s interest rate hike hits expensive tech stocks hard

NEW YORK — Wall Street markets tumbled Monday amid renewed worries about China’s economy piled on top of global financial markets already battered by rising interest rates.

The S&P 500 fell 132.10 to 3,991.24. The Dow dropped 653.67 points to 32,245.70. The Nasdaq slid 521.41 points to 11,623.25.

Smaller company stocks also fell broadly. The Russell 2000 gave up 77.48 points, or 4.2 percent, to 1,762.08.

The number of companies citing “weak demand” in their conference calls following earnings reports jumped to the highest level since the second quarter of 2020, strategist Savita Subramanian

wrote in a Bofa Global Research report. Tech earnings are also lagging, she said.

The tech sector is the largest in the S&P 500 by market value, giving it additional weight for the market’s movements. Many tech-oriented companies saw profits boom through the pandemic as people looked for new ways to work and entertain themselves while locked down at home. But slower profit growth leaves their stocks vulnerable after their prices shot so high on expectations of continued gains.

The higher interest rates engineered by the Fed are also hitting tech stocks particularly hard because they’re seen as some of the market’s most expensive. The Nasdaq composite’s loss of 25.7 percent for 2022 so far is much sharper than that for other indexes.

Electric automaker Rivian Automotive slumped 20.9 percent Monday as restrictions expire that prevented some big investors from selling their shares following its stock market debut six months ago. The company has lost more than three quarters of its value so far this year.

The yield on the 10-year Treasury has shot to its highest level since 2018 as inflation and expectations for Fed action rose. It moderated Monday, dipping to 3.03 percent from 3.12 percent late Friday. But it’s still more than double where it started the year.

Oil prices fell, weighing down energy stocks. Benchmark U.S. crude fell 6.1 percent to settle at $103.09 per barrel, though it’s still up about 40 percent this year. Brent crude, the international standard, fell 5.7 percent to settle at $105.94 a barrel.