Stocks sink as curb worries on the rise

U.S. stocks dropped as investors parsed comments from Federal Reserve officials who broadly remained steadfast in their fight against inflation. Mounting concerns that China may tighten COVID curbs after a string of reported deaths also continued to weigh on investors.

Technology stocks, which are typically more sensitive to interest rates, dragged the S&P 500 lower. The Nasdaq 100 ended the day down 1.1 percent. Oil emerged from a volatile session largely unchanged after Saudi Arabia denied a report that it is discussing an oil-production increase for the OPEC+ meeting next month. The dollar gained as investors sought haven assets. Treasuries were mixed.

Investors are closely watching what Fed speakers say about the outlook for interest rates. While several central bank officials in recent days have restated their intention to stay on their path of rate hikes, they differ on how far they’ll go. On Monday, San Francisco Fed President Mary Daly said that officials will need to be mindful of the lags with which monetary policy is transmitted through the economy as they raise interest rates further in order to drive down inflation. Her Cleveland counterpart Loretta Mester said she’s open to slowing the tempo of rate hikes.

“This shouldn’t be regarded as a pivot or anything new,” Michael Contopoulos, director of fixed income at Richard Bernstein Advisors, said about Daly’s comments.

Meanwhile, China saw its first Covid-related death in almost six months on Saturday and another two were reported on Sunday. Worsening outbreaks across the nation are stoking concerns that authorities may again resort to harsh restrictions.