Economic worries weigh heavily on US equities

AndDisappointing economic data from China and fears of rapidly rising interest rates weighed heavily on US exchanges earlier in the week. In particular, tech stocks flew out of deposits, which sent the Nasdaq index down 4.3% to 11,623 points. The Dow Jones lost two percent to 32,246 positions. The broader S&P 500 fell 3.2% to 3,991 points, the first time since late March 2021 below the 4,000 mark.

“The fear has become so great that everything is sold and the proverbial baby is thrown out with the bathwater,” said Christopher Grisanti, MAI Capital Management’s chief equity strategist. Investors were particularly concerned about long-term interest rates. “The higher they go, the more fearful they are of recession or stagflation.”

After a US Federal Reserve rate hike of half a percentage point last week, many traders are expecting a further 0.75 percentage point hike in June. “The concern is that the Federal Reserve will essentially ignore market conditions and stock market volatility and proceed to raise interest rates,” said Matt Stucky, portfolio manager at Northwestern Mutual Wealth Management.

Advantages of the dollar as a “safe haven”

Against this backdrop, the dollar index temporarily rose to 104.19 points, the highest level since December 2002, before falling again a little later. In the current uncertain environment, the world’s leading currency has also benefited from its ‘safe haven’ image, Barclays Bank analysts write. Investors watched the military parade in Moscow on the anniversary of the Soviet Union’s victory over Nazi Germany in 1945 with a worried expression. In a speech, Russian President Vladimir Putin accused the West of preparing an invasion of his country. Contrary to recent fears, however, he has not announced a general mobilization or the use of new weapon systems.

Bitcoin cryptocurrency has gone under the wheels. The price plunged more than 15 percent to $ 30,450 just before the close of trading on Wall Street. Ethereum slipped by more than 17%. “As interest rates rise, investors are turning their backs on risky asset classes and looking for fixed income alternatives,” said Emden Research analyst Timo Emden. Both cryptocurrencies recovered slightly after the market closed.

Tesla under pressure

One of the biggest losers was Tesla, who was down a good nine percent. Supplier Quanta, which makes computer circuits for the electric car maker, is struggling with an increasing number of corona infections at its manufacturing facility in China. This also applies to Apple. The US company relies on Quanta for its MacBooks. Apple shares fell 3.3%. Other tech stocks like Microsoft, Amazon, Alphabet and Google-owner Meta lost between 2.8 and 5.2%.

A media report on the sale of shares in major investor Ford dropped Rivian by 20.1%. Ford is selling eight million of its Rivian shares because the holding period expired on Sunday, CNBC reported over the weekend. According to Refinitiv, Ford was Rivian’s fourth largest shareholder with an 11.4% stake. The electric car maker lowered its production targets for 2022 due to supply chain problems.

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