Investors in recession fears
The Dow drops below 30,000
The previous day’s price gains after the US interest rate hike is already a wasteland just one day later. Other central banks are following the Fed’s example and tightening their monetary policy, which once again makes investors aware of the risks of global inflation. For the first time since early 2021, the Dow has dropped below the 30,000 mark, with the high-tech Nasdaq being the hardest hit.
The initially positive investor reaction to the sharpest rise in US interest rates since 1994 is giving way to disillusionment. The US standard value index Dow Jones closed 2.4% down at 29,927 points, exceeding the 30,000 points threshold for the first time since the beginning of 2021. The high-tech one Nasdaq fell 4.1 percent to 10,646 points. The wide one S&P 500.SPX it lost 3.3 percent to 3666 points.
US Treasury bills also flew out of portfolios, causing the return of the Ten-year T-bond it approached its recent eleven-year high of 3.625%. “The Fed’s rally is fading as investors question the Fed’s ability to achieve a soft landing for the economy,” said Peter Cardillo, chief economist at investment firm Spartan. Therefore, the stock market has not yet hit rock bottom. Geir Lode, head of securities of Federated Hermes asset manager, was also pessimistic about the future prospects. “We see more and more likely that it will take a recession and higher unemployment to bring inflation back under control.” US President Joe Biden, on the other hand, told the AP news agency that a recession is not inevitable. Furthermore, no country in the world is as well positioned as the United States to be able to overcome inflation.
Against this backdrop, investors have particularly separated from tech stocks. Hence the actions of Amazon, Apple, Netflixthe Facebook operator Half and the parent of Google Alphabet up to 3.9 percent. Higher interest rates will devalue the future profits of these high-growth companies.
Credit card investors and payment processors have also had to give up due to growing fears of a recession. The titles of American Express, Mastercard, PayPal And Visa it fell as much as six percent. cards from major banks Bank of America, Citigroup And JP Morgan therefore it gave about 1.7 per cent in each case.
Retailers have been struck by the prospect of consumers losing their buying spirit. The actions of the department store chain by Macythe operator of the hardware store Home storage and the fashion company Split it slipped up to 9.6%. For similar reasons, investors in chip makers such as AMD, Intel or Nvidia from whose documents they have lost up to 8.1%. The Philadelphia Semiconductor Index temporarily fell 6.2%.
Cryptocurrencies still under pressure
The selling atmosphere has once again gripped cryptocurrencies. Bitcoin And Ethereum it got cheaper by about four at 20,742 or 8.4 percent at $ 1081. The inclination of Centigrade, a cryptocurrency loan provider, continues to give investors headaches, said Emden Research analyst Timo Emden. They feared that other companies in the industry would be dragged along.
In this context, the values of the cryptocurrency sector and the companies dealing with the blockchain technology behind Bitcoin & Co have flown out of the deposits. So the newspapers fell Coinbase, Riot, Marathon And Silvergate up to 8.5%. The shares of the electric car company Tesla and the software company MicroStrategywho invested billions in Bitcoin, fell by 8.5 and 5.8 percent respectively.