Dow falls 600 points, heads for worst day since June as the market’s summer rally flails

All 11 sectors in the S&P 500 were in the red on Monday. Consumer discretionary, communication services and information technology were the biggest losers, as investors dumped shares of cyclical and growth stocks. The sectors were last down 2.8%, 2.7% and 2.6%, respectively.

Energy was the best-performing sector, down 0.85%.

— Sarah Min

Nearly all members of the S&P 500 were affected by the pullback. During Monday afternoon trading, there were 480 losing stocks, and just 23 members in the green, according to FactSet.

— Sarah Min

Monday’s sell-off put the S&P 500 on track for its biggest one-day drop since June 28, when it slid 2.01%. As of 1:13 p.m. ET, the benchmark index was down 1.85%.

JPMorgan global strategist Marko Kolanovic is sticking with his bullish view on the U.S. economy and stocks.

“We maintain that inflation will resolve on its own as distortions fade, and likely drive a Fed pivot, while a stronger H2 recovery in China should provide support for the global cycle. This, in combination with still very low investor positioning, creates a positive environment for cyclical assets,” Kolanovic wrote in a note to clients on Monday.

Kolanovic has remained bullish through most of 2022 despite the sharp declines for stocks in the first half of the year.

The aggressive selling by investors earlier this year is a key reason why stocks can go higher from here, Kolonovic said.

“Given our core view that there will be no global recession and that inflation will ease, the variable that matters the most is positioning. And positioning is still very low – for both systematic and discretionary funds it is now in the ~10th percentile,” Kolanovic said.

— Jesse Pound

Cathie Wood’s flagship Ark Innovation ETF continued to fall Monday on the back of a broader decline in growth and tech stocks. The tech-heavy Nasdaq Composite was also down 2%.

The exchange traded fund lost 2% on Monday. Last week, the Ark Innovation ETF fell 14.1% for the week, closing out its first losing week in three and its worst week since February 2021.

The ARK ETF is currently negative for the month, on pace for its ninth monthly loss in 10.

— Sarah Min, Nicholas Wells

The number of declining stocks far outpaced those advancing Monday, as the equity market struggled at the start of the week.

FactSet data show 2,450 New York Stock Exchange-listed stocks fell, while 503 names traded higher. In other words, roughly five stocks declined at the NYSE for every advancer.

—Fred Imbert

Investors hoping for a Federal Reserve pivot from its hawkish rate hikes may have been responsible for the recent rally, but the rebound also resembles a bear market rally, according to Goldman Sachs.

“Performance around bear market rallies and the end of Fed hiking cycles look similar, and ultimately the path of both inflation and growth will determine the market’s trajectory through year-end,” David Kostin, Goldman’s head of U.S. equity strategy, said in a Friday note to clients.

He sees limited upside and potential downside risks ahead, including fears about a recession.

CNBC Pro subscribers can read the full story here.

—Michelle Fox

The euro on Monday fell back below parity with the dollar, notching a fresh low of 0.9926 against the greenback and hitting its lowest level since Dec. 2, 2002.

The dip in the euro came as the dollar index hit 109.097, its highest level since July 14. Meanwhile, the pound stooped to its lowest level against the dollar since March 2020.

The dollar index was last up 0.7% to 108.93, while the euro traded down 0.92% at 0.9942 versus the dollar.

— Samantha Subin, Gina Francolla

AMC — Shares of the theater chain dropped as investors weighed the company’s new preferred share class and news that rival Cineworld that it was considering bankruptcy.

Signify Health — Shares of the home health services provided jumped after The Wall Street Journal and Bloomberg News reported that Amazon is among the bidders for the company.

Ford — Ford shares sank after a jury ruled against the automaker in a case involving a fatal crash that centered on roof strength in one of its older pickup trucks.

Check out our full story here.

—Michelle Fox, Fred Imbert

Fed Chairman Jerome Powell speaks at the annual Wyoming conference Friday morning at 10 a.m. ET.

Wells Fargo’s Michael Schumacher said the market expects Powell to talk tough about raising interest rates, after recent hawkish comments from other Fed officials. Last week, St. Louis Fed President James Bullard, for instance, said he would like to see a third consecutive 0.75 percentage point rate hike in September.

“I’m not convinced he’s going to pull out the talons and sound hawkish. I think the fear is he’s going to be hawkish.” says Schumacher.

–Patti Domm

Ford Motor shares sank 5.4% after a jury on Friday ruled against the automaker in a case focused on the roof strength in one of its older pickup trucks.

A Georgia jury last week ordered the company to pay $1.7 billion to the family of two people killed in a 2014 accident involving the rollover of an F-250 pickup truck.

Tech stocks sank on Monday as investors feared more aggressive hikes from the Federal Reserve and investors look ahead to comments from Fed Chair Jerome Powell later this week in Wyoming.

Big technology names Apple, Amazon, and Alphabet fell 1.7%, 3.3%, and 2.4%, respectively, while Netflix sank more than 5%. Semiconductor stocks also took a hit, with Nvidia, Micron and Advanced Micro Devices down more than 2% each.

Popular software names also took a hit, with shares of Atlassian and Datadog each tumbling more than 4%.

— Samantha Subin

The value of bitcoin dipped below $21,000 around 4:15 a.m. ET on Monday. The cryptocurrency inched back up to $21,297 by 9:46 a.m., down only 1%, according to CoinMetrics. Ethereum also slid Monday morning to $1,571.35, off more than 3%. 

Bitcoin, which trades 24 hours, had also slipped over the course of the weekend.  

Crypto-linked stocks also stumbled. Shares of MicroStrategy and Riot Blockchain slipped more than 1%.

Declines in virtual currency come at a time when Wall Street’s summer rally has begun to fizzle out. The three major indexes began Monday’s session with declines, and all three ended the prior week with losses.

 ­-Darla Mercado, Nick Wells

Shares of AMC were down about 38% in the opening minutes of trading on Monday after rival theater chain Cineworld said it was considering filing for bankruptcy.

AMC’s new preferred share class called “APE” units are also scheduled to begin trading on Monday. The shares were distributed as a dividend to existing shareholders and could be a tool for AMC to raise money in the future.

Because the APE unit dividend resembles a stock split, the move could be putting pressure on AMC’s common shares this morning.

— Jesse Pound

Stocks opened lower Monday as the summer rally waned ahead of the Federal Reserve’s Jackson Hole symposium. The Dow Jones Industrial Average fell 376 points, or by 1.12%. S&P 500 and Nasdaq Composite dropped 1.29% and 1.42%, respectively.

— Sarah Min

A measure of stock volatility called the VIX rose to its highest level since Aug. 3.

The Cboe Volatility Index climbed 2.6 points to 23.16 on Monday, though it is still off its recent high when it spiked above 30 in June.

— Sarah Min

Federal Reserve Chairman Jerome Powell will likely take an aggressive stance against inflation in his Jackson Hole speech on Friday, according to Wolfe Research.

“We expect Powell to sound more hawkish at Jackson Hole,” Wolfe Research’s Chris Senyek wrote in the Monday note.

“As we’ve previously discussed at length, we believe that Fed would have to hike the fed funds rate to 4.5%+ to set inflation on a sustainable path back toward the FOMC’s long-term 2% target,” he added.

The research firm said the central bank is “behind the curve,” and outlined reasons why it’s not buying into the bull case, including slowing global growth and inflated earnings expectations.

— Sarah Min

Shares of Signify Health surged nearly 38% in Monday premarket trading following a Wall Street Journal report saying that Amazon is among several companies bidding for the healthcare company.

The tech giant, along with CVS Health and UnitedHealth Group, is competing in an auction that would value Signify at more than $8 billion, according to the report citing people familiar with the matter.

Amazon shares declined 2% in Monday premarket trading.

Netflix has bounced sharply since mid-July, but the good times for the streaming stock won’t last long, according to CFRA.

Analyst Kenneth Leon downgraded Netflix to sell from hold, noting that: “The key catalyst for NFLX — introducing new ad-pay subscription plans — may not be visible until 2023.”

Netflix shares fell 2% in the premarket.

CNBC Pro subscribers can read the full story here.

—Fred Imbert, Carmen Reinicke

The euro briefly slipped below parity with the U.S. dollar on Monday for the first time since mid-July, as euro zone recession fears resurfaced.

As of 9:15 a.m. London time, the common currency had recovered fractionally and was trading at exactly $1.

– Elliot Smith

European markets retreated on Monday as fears of more aggressive interest rate hikes from the Federal Reserve and the European Central Bank returned to the fore.

The pan-European Stoxx 600 slipped 1.2% by mid-morning in London, with autos falling 2.9% to lead losses as all sectors and major bourses traded in negative territory.

Risk sentiment was dampened by hawkish signals from ECB policymakers, with Bundesbank President Joachim Nagel telling a German newspaper that the ECB must continue hiking interest rates even as recession risks in Germany grow.

Minutes from the ECB’s most recent policy meeting will be published Thursday, while investors will be paying close attention to euro zone flash PMIs due on Tuesday.

The People’s Bank of China cut its one-year benchmark lending rate by 5 basis points and its five-year rate by 15 basis points, according to an online statement.

That brings the one-year loan prime rate to 3.65% and the five-year LPR to 4.3%.

Analysts polled by Reuters expected a 10-basis-point cut to the one-year LPR, and half of the survey respondents expected the five-year rate to be lowered by 15 basis points.

— Abigail Ng

Stocks have been volatile this year, as a mix of recession fears, inflationary pressure and other macro risks roil markets.

Here are three ways that investors can adjust their portfolios to lower their risks or mitigate losses, according to Goldman Sachs, Wells Fargo and others.

Pro subscribers can read more here.

— Weizhen Tan

Investors have flocked to growth stocks of late, but as recession fears mount, market watchers are deciding whether to rotate into safer bets instead.

JPMorgan, however, thinks the rally still has further to go, and named several indicators to watch for when considering a rotation out of growth stocks.

Pro subscribers can read the story here.

— Zavier Ong

Investors are wrapping up earnings season with just a couple dozen companies in the S&P 500 yet to go. Of the 95% of companies in the broader market index that have reported earnings, roughly 75% have beat expectations, according to FactSet.

— Sarah Min

Fed Chairman Jerome Powell is expected to speak at the central bank’s annual symposium in Jackson Hole, Wyoming this week, and shed some light on the pace of future interest rate hikes.

Powell may advance hawkish comments from Fed officials who recently underscored their commitment to fighting inflation, even as investors enjoyed a summer rally partly on expectations of a less aggressive Fed.

Still, St. Louis Fed President James Bullard said in an interview last week with the Wall Street Journal that he is considering another 0.75 percentage point interest rate hike at the September meeting.

Check out CNBC Pro for more on what to expect from the Fed chair.

— Sarah Min

Futures opened lower Sunday night. Dow Jones Industrial Average futures fell by 94 points, or 0.28%. S&P 500 and Nasdaq 100 futures dipped 0.36% and 0.69%, respectively.

— Sarah Min