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Wall Street slumps and erases big rally from the day before | Associated Press

New York (AP) — Equities have fallen on Wall Street, eradicating the backlash from the previous day, as markets value the looming fallout from the Fed’s fight against enhanced inflation.

Wednesday, the Fed Raised the benchmark interest rate It rose 0.5 percentage points as part of efforts to delay consumer borrowing and curb inflation, which has been 40 years high. The market recovered when Federal Reserve Chair Jerome Powell denied the Fed could resort to a more aggressive three-quarter point increase in the future.

Today, traders are beginning to be more concerned about the impact of the Fed’s move to curb demand and slow the economy.

Sam Stovall, CFRA’s Chief Investment Strategist, said:

The S & P 500 fell 3.7% at 11:55 am. The Dow Jones Industrial Average fell 1,100 points (3.3%) to 32,945, while the Nasdaq fell 5%.

Bond yields have resumed an upward march. This will increase your mortgage yield. Yields on 10-year government bonds soared from 2.92% the day before to 3.09%.

With the Fed’s aggressive shift to raise interest rates, investors are worried about whether they can slow down the economy enough to stop high inflation, but stop the delicate dance that doesn’t cause a recession. I am. The pace and magnitude of rising interest rates has been scrutinized on Wall Street.

“Investors have realized that the Fed’s continued take a very cautious approach can actually leave inflation out of control,” said Stobal.

Recent moves by the Fed to raise interest rates by half a percentage point have been widely anticipated. Markets stabilized this week prior to the policy renewal, but Wall Street was concerned that the Fed might choose to raise interest rates by three-quarters in the coming months. Powell said the central bank was “not actively considering” such an increase, alleviating these concerns.

The central bank also announced that it will begin reducing its $ 9 trillion balance sheet, which consists primarily of Treasury and mortgage bonds, starting June 1. For mortgages, it’s low.

The Bank of England On Thursday, we raised the benchmark interest rate to the highest level in 13 years. This is the fourth rate hike since December, as UK inflation is at its highest level in 30 years.

The energy market remains volatile as demand remains high amid continued conflicts in Ukraine and tight oil supplies. The European government is trying to replace the energy supply from Russia and is considering an embargo. OPEC and its allies have decided on Thursday to gradually increase the flow of crude oil to the world.

Rising oil and gas prices contribute to the uncertainty that weighs heavily on investors seeking to assess how inflation ultimately affects businesses, consumer activity, and overall economic growth. It has become.

The latest corporate earnings report is also carefully watched by investors looking to better understand the impact of inflation on the economy. Grain maker Kellogg’s rose 3.8% after reporting promising performance. After making weak predictions, Etsy stumbled 17.2%.

twitter It rose 3.6% after Tesla CEO Elon Musk said he had secured more support to buy the company.

Technology companies suffered the most losses, reversing from the strong rise of the previous day and squeezing the wider market. Internet retail giant Amazon fell 7% and Google’s parent company fell 5.1%.

Copyright 2022 AP communication. all rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.



Wall Street slumps and erases big rally from the day before | Associated Press

Source link Wall Street slumps and erases big rally from the day before | Associated Press

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