US stocks fell as investors scrutinized remarks from Federal Reserve officials, who remained steadfast in their fight against inflation. Concerns that China may tighten COVID curbs in response to a string of reported deaths weighed on investors.
The S&P 500 was dragged down by technology stocks, which are typically more sensitive to interest rates. The Nasdaq 100 fell 1.1% on the day. Oil ended a volatile session largely unchanged after Saudi Arabia denied reports that it is discussing an increase in oil production for the Opec+ meeting next month. As investors sought safe-haven assets, the dollar rose. Treasury bonds were mixed.
Investors are paying close attention to what Fed speakers have to say about the outlook for interest rates. While several central bank officials have reiterated their intention to continue raising interest rates, they differ on how far they will go. On Monday, San Francisco Fed President Mary Daly stated that officials will need to be mindful of the lags with which monetary policy is transmitted through the economy as interest rates are raised further to reduce inflation. Loretta Messer, her Cleveland counterpart, has stated that she is open to slowing the pace of rate hikes.
Meanwhile, Atlanta Fed President Raphael Bostic has stated that he favors slowing the pace of interest rate increases, with no more than one percentage point hikes, in order to ensure the economy has a soft landing. Boston Fed President Susan Collins has reiterated options for the size of the December interest rate, including the possibility of a 75 basis-point move.
Traders will also be looking for clues on the Fed's future path this week in the minutes of the most recent policy meeting on Wednesday.