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Stocks were trading sharply lower early Monday as the market’s summer rally appears to have stalled out.
Near 10:20 a.m. ET, the S&P 500 was off 1.7%, the Nasdaq down 2%, while the Dow was off 470 points, or 1.4%.
Last week, the major averages lost ground for the first time in four weeks, snapping their longest weekly winning streak since November 2021.
WTI crude oil futures were also trading sharply lower, falling more than 4% to below $87 a barrel and approaching the 8-month low reached early last week.
The euro was also trading back below parity with the US dollar as the dollar continues its best year since the late ’90s.
Elsewhere in markets early Monday, bitcoin (BTC-USD) was down about 1% to trade near $21,200 after cracking $21,000 overnight for the first time since late July.
Crypto markets, which have rallied alongside stocks over the last several weeks, also stalled out on Friday with bitcoin and ethereum (ETH-USD) both losing about 8%.
The 10-year yield, which had declined as bonds rallied with stocks in the early phase of this summer’s rebound, was trading back at 3% early Monday, its highest level since July 20. The 10-year yield rose about 20 basis points last week amid a broader slide in the stock market.
The latest iteration of the meme trade continued to unravel early Monday, with shares of AMC (AMC) falling more than 36% at the open as the company’s new preferred share class is set to begin trading under the ticker ‘APE’ on Monday.
Unlike traditional preferred stock arrangements that typically offer holders additional economic benefits like larger dividends, AMC’s new offering has the same voting and economic rights as common shares. AMC announced this new preferred share class on August 4.
In the weeks since AMC’s APE announcement, a rally in several meme stocks — most notably Bed Bath & Beyond (BBBY) — has been the primary non-Fed-driven story in financial markets.
Last week, the Bed Bath & Beyond story began unraveling when Ryan Cohen, chairman at GameStop, Chewy co-founder, and ring leader of the first act of the meme trade back in 2021, disclosed the sale of his entire 11.8% stake in the struggling retailer after a manic rally in shares last week.
This news sent Bed Bath & Beyond shares down 40% on Friday. Bloomberg also reported late last week Bed Bath & Beyond had hired restructuring lawyers and was facing delayed shipments from suppliers over late payments.
This loss of momentum in the market comes ahead of the Fed’s key Jackson Hole conference later this week, with Fed Chair Jerome Powell’s speech on Friday likely to offer clues on the magnitude of the central bank’s next interest rate increase.
Friday morning will also feature the latest reading on PCE inflation, the Fed’s preferred measure, as investors look for additional signs inflation pressures may have peaked, a potential positive catalyst for risk assets.
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