Dow Falls 100 Points As Tumbling British Pound Deepens the Market Wounds

Bull - Market Indicator
Bull - Market Indicator

The Dow Jones Industrial Average tumbled on Monday as investors feared soaring interest rates and foreign currency chaos could push the S&P 500 to a new closing low for the year.

The Dow shed 120 points or 0.4%. The S&P 500 slipped 0.2%, and the Nasdaq Composite gained 0.4%.

Consumer discretionary lent support to the broader market index after a surge in casino stocks. Wynn Resorts soared 12.9%, and Las Vegas Sands was 12.5% higher, following news that China would allow tour groups in Macau for the first time in nearly three years.

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The British pound plunged to a record low on Monday against the U.S. dollar, falling 4% at one point to an all-time low of $1.0382. The pound has since come off its worst levels on speculation that the Bank of England may have to raise rates more aggressively to quell inflation.

“Such U.S. dollar strength has historically led to some kind of financial/economic crisis,” wrote Morgan Stanley’s Michael Wilson, chief U.S. equity strategist, in a note. “If there was ever a time to be on the lookout for something to break, this would be it.”