NEW YORK: Wall Street stocks suffered bruising losses yesterday in a broad-based sell-off prompted by unease over shifting monetary policy and rising economic risks from inflation.
All three main Wall Street benchmarks erased gains made during a relief rally on Wednesday, with the Nasdaq posting its biggest one-day percentage decline since June 2020 and its lowest finish since November 2020. The Dow’s decline was its worst daily performance since October 2020.
The Dow fell 1,063.09 points, or 3.12%, to 32,997.97, the S&P 500 lost 153.3 points, or 3.56%, to 4,146.87 and the Nasdaq Composite dropped 647.17 points, or 4.99%, to 12,317.69.
Only 19 of the S&P 500’s constituents closed in positive territory, one of which was Twitter Inc, which ended 2.6% higher.
The Federal Reserve (Fed) on Wednesday raised interest rates by half a percentage point as expected and Fed chair Jerome Powell explicitly ruled out an increase of 75 basis points in a coming meeting.
Traders, however, yesterday raised their bets on a 75 basis-point increase at the Fed’s June meeting.
While Wednesday’s outcome was not as hawkish as feared, the Fed’s announcement still embodies “one of the most aggressive tightening cycles that we have seen in decades”, said Angelo Kourkafas, investment strategist at Edward Jones.
“It didn’t necessarily change the narrative that economic growth is slowing, while the Fed will tighten monetary policy at the at the fast pace,” Kourkafas said.
Technology megacaps slumped. Google-parent Alphabet Inc, Apple Inc, Microsoft Corp, Meta Platforms, Tesla Inc and Amazon.com all fell between 4.3% and 8.3%.
“Investors aren’t looking at fundamentals (such as earnings) right now, and this is more of a sentiment issue,” said Megan Horneman, chief investment officer at Verdence Capital Advisors.
“You’re seeing those areas of the market which are purely discretionary, they are the ones getting hit today because everyone is anticipating that this is going to be a challenging period for consumers over the next several quarters,” said Horneman.
The CBOE Volatility index, also known as Wall Street's fear gauge, climbed to 31.20 points. – AFP, Reuters
Source: The Sun Daily
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