By 
U.S. stocks narrowed Monday’s losses as investors continued to react to last week’s Jackson Hole speech by Federal Reserve Chairman Jerome Powell, who underlined policy makers’ resolve to squeeze out inflation even if it results in economic pain.
What’s happening
The Dow Jones Industrial Average
DJIA,
-0.25%
was down 108 points, or 0.3%, at 32,175, after dropping by more than 300 points earlier in the session. Dow industrial had turned briefly positive in afternoon trading.
The S&P 500
SPX,
-0.29%
was down 15 points, or 0.4%, at 4,043.
The Nasdaq Composite
COMP,
-0.62%
shed 40 points, or 0.3%, to trade at 12,100.
Stocks recorded their worst day in months on Friday, when the Dow industrials tumbled 1,008.38 points, or 3%, to close at 32,283.40, its biggest percentage decline since May 18. The S&P 500 slid 3.4%, its biggest drop since June 13, and the Nasdaq Composite
COMP,
-0.62%
tumbled 3.9%, the largest drop since June 16.
What’s driving markets?
Markets remained rattled by Powell, who made blunt comments about the central bank’s commitment to bringing down high inflation on Friday during a speech at the Kansas City Fed’s annual symposium at Jackson Hole, Wyo.
See: Fed’s Powell sparked a 1,000-point rout in the Dow. Here’s what investors should do next.
Powell said the Fed would continue the fight even if it means pain for American families and businesses. His comments seemed to dash investor notions of a coming “pivot” away from aggressive rate increases.
“Chair Powell told us on Friday that the Fed is willing to accept a recession, if that’s the cost of bringing inflation under control,” Bill Adams, chief economist at Dallas-based financial services company Comerica, said via phone. “The Fed is preparing private sector observers for ‘some pain’ to households and businesses, which I think is a polite way of saying ‘recession.’ “
Because of delays between the time inflation would theoretically slow and economic data is released, “that means the Fed is going to wait longer into a cooling economy before its willing to take its foot off the brake,” Adams said.
Powell also mentioned a resilient jobs market, suggesting that he is willing to allow unemployment to climb, according to Ipek Ozkardeskaya, senior analyst at Swissquote Bank. This means another strong print on the state of jobs growth in August could help strengthen the Fed’s resolve.
“Due Friday, the NFP data is expected to print another month close to 300,000 new nonfarm job additions in the U.S. Over the past four months, the data clearly exceeded the market expectations, especially last month, the number printed was above half-a-million new job additions, versus around 250,000 expected by analysts,” Ozkardeskaya said.
Even if the data were to come in short of economists’ expectations, investors shouldn’t expect to see any change in the Fed’s outlook. Instead, “from now on, we expect to see a deeper downside correction in equities, and further retracement of the summer rally.”
Before the stock-market selloffs on Monday and Friday, “the market got ahead of itself on the false premise that the Fed would be easing off the brakes,” said David Donabedian, chief investment officer of CIBC Private Wealth. “The recent two-month rally was not the start of a bull market, but a rally within a bear market. Powell’s speech was not a pivot, but a more forceful restating of the Fed’s unconditional commitment to fighting inflation — and a reset for the equity market.”
The CIO said in emailed comments that CIBC Private Wealth now expects a more drawn-out period of monetary tightening, with more risk to the outlook for economic growth and more violent stock-market reactions to news developments. “The concern going forward is that the Fed continues to raise rates even in a recession. This will be problematic for corporate profits, and the market will need to adjust,” he said.
Companies in focus
Tesla Inc.
TSLA,
-0.75%
Chief Executive Elon Musk said Monday he is aiming to get the electric-vehicle maker’s self-driving technology ready by year-end, and said he hopes it could quickly be in wide release in the U.S. and even Europe depending on regulatory approval, Reuters reported. Shares fell 1.2%.
Shares of Bed Bath & Beyond Inc.
BBBY,
+24.86%
surged 29% to buck the broader market’s selloff as meme-stock investors expressed optimism ahead of the home-goods retailer’s strategic update.
On Monday, Boeing Co.
BA,
+0.86%
announced an order from United Parcel Service Inc.
UPS,
-0.42%
for eight more 767 Freighters. That would bring package delivery giant UPS’s fleet of 767 Freighters to 108. Boeing shares advanced 0.9%.
Other assets
The ICE U.S. Dollar Index DXY was down 0.1%.
Oil futures moved higher, with the U.S. benchmark
CL.1,
+4.17%
jumping 4.2% to close at $97.01 a barrel, while the December gold futures contract lost a dime to settle at $1,749.70 an ounce.
Bitcoin
BTCUSD,
+0.59%
rose 2.8% to trade around $20,187.
The Stoxx Europe 600
SXXP,
-0.81%
finished down by 0.8%, while London markets were closed for the summer bank holiday.
The Shanghai Composite
SHCOMP,
+0.14%
ended 0.1% higher, while the Hang Seng Index
HSI,
-0.73%
finished down by 0.7% in Hong Kong and Japan’s Nikkei 225
NIK,
-2.66%
dropped 2.7%.
Hear from Carl Icahn at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. The legendary trader will reveal his view on this year’s wild market ride.
— Barbara Kollmeyer contributed to this article.
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