Shares are plummeting on Wall Street, erasing a rebound a day earlier as markets assess the consequences of the Federal Reserve’s intensified fight against inflation.
The Dow fell more than 1,000 points, or 3%, from noon EST, while the S&P 500 fell 3.7%. The high-tech Nasdaq fell 4.8%.
Markets recovered a day earlier after the Federal Reserve said on Wednesday it would not move as fast as some had feared raising interest rates. But traders are beginning to worry more about the impact of Fed moves to curb demand for cash loans as it tries to cool rising inflation.
Bond yields have resumed upward, which will send type of mortgage higher. The 10-year Treasury yield rose sharply to 3.1%, reaching its highest levels since late 2018.
Technology companies had some of the biggest losses and weighed the market as a whole, in an investment of the solid gains they made a day earlier. Apple fell 3.4% and Microsoft 3.9%.
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Internet retail giant Amazon fell 6.4% and Google’s parent company Alphabet fell 4.3%.
Energy stocks have held up better than the rest of the market as US crude oil prices rose 1.4%. Energy markets remain volatile as the conflict in Ukraine continues and demand remains high amid scarce oil supply. European governments are trying to replace Russia’s energy supply and are considering a embargo. OPEC and allied oil-producing countries on Thursday decided to gradually increase their crude oil flows to the world.
However, rising oil and gas prices have contributed to the uncertainties facing investors as they try to assess how inflation will affect business, consumer activity and overall economic growth.
The Fed’s aggressive shift to raising interest rates makes investors worried about whether it can strike a complicated balance: slowing the economy far enough to stop high inflation, but not so much as to trigger a recession.
The Fed’s latest move to increase interest rates by half a percentage point it had been widely expected. Markets stabilized this week ahead of the policy update, but Wall Street was worried that the Fed would choose to raise rates by three-quarters of a percentage point in the coming months. Fed Chairman Jerome Powell eased those concerns, saying the central bank is “not actively considering” the increase.
The central bank also announced that it will start reducing its huge balance of $ 9 trillion, which consists mainly of Treasury bonds and mortgages, starting June 1.
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The Bank of England on Thursday raised its benchmark interest rate to its highest level in 13 years, its fourth rise since December, as UK inflation hit a 30-year high.
The latest corporate earnings reports are also being closely watched by investors trying to get a better picture of the impact of inflation on the economy. Cereal maker Kellogg rose 4.1% and energy company ConocoPhillips 1.7% after encouraging encouraging financial results. Etsy stumbled 15.5% after making a weak forecast.
Twitter rose 3.6% after Tesla CEO Elon Musk said yes assured more support for his attempt to take over the company.
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