Business

With one eye on the Fed meeting, Wall Street closed lower on fears of a sharp rise in interest rates

Operators work on the floor of the New York Stock Exchange (NYSE) (REUTERS / Andrew Kelly)
Operators work on the floor of the New York Stock Exchange (NYSE) (REUTERS / Andrew Kelly)

Stocks closed lower at wall street pending a key decision on interest rates by the Federal Reserve.

The S&P 500 lost 43.61 points, or 1.1%, to 3,856.28 points, while the Nasdaq Composite it gave up 107.87 points, or 0.9, to 11,427.15 points. The Industry Average dow jones it fell 306.89 points, or 0.99%, to 30,712.79 points.

Treasury yields were mostly up. Operators are waiting to see How far will the Fed raise interest rates? at its meeting which ends on Wednesday. The Fed has been raising the cost of borrowing money in hopes of curbing the highest inflation in four decades.

Traders fear the Fed will overshoot its target and slow the economy so much that it triggers a recession.

The market is preparing for the worst and you’re seeing a little bit of selling pressure,” said Paul Kim, managing director of Simplify ETFs.

The retailersthe values technologicalthe companies sanitary and the banks they were among the heaviest weights on the market.

Bond yields mostly up. The 10-year Treasury yield, which influences mortgage interest rates, rose to 3.56% from 3.52% late Monday and is trading at its highest levels since 2011.

The 2-year Treasury yield, which tends to follow the Federal Reserve Action Expectationsrose to 3.96% from 3.95% late Monday and is hovering around its highest levels since 2007.

Stocks have fallen and Treasury yields have risen as the Fed raises the cost of borrowing money in hopes of curb the hottest inflation of the last four decades. The central bank’s aggressive rate hikes have unnerved markets, especially as Fed officials affirm their determination to keep raising rates until they are sure inflation is under control.

The chairman of the Fed, Jerome Powellbluntly warned in a speech last month that rate hikes would “bring some pain.”

“He’s gone out of his way to signal that it’s going to be another aggressive movesaid Liz Young, head of investment strategy at SoFi. “It has been clear as a bell what they have focused on.”

The Fed is expected to raise its key short-term interest rate by three quarter point by third time at their Wednesday meeting. This would raise its reference rate, which affects many loans to consumers and companies, to a range of between 3% and 3.25%, the highest level in 14 yearss, and above the zero at the beginning of the year.

Wall Street is concerned that rate hikes will too far in slowing economic growth and push the economy into a recession. This concern has been heightened by data showing that the US economy is already slowing and by business warnings about the impact of inflation and problems with supply chain in its operations.

The United States is not the only country suffering from hot inflation or facing the impact of efforts to combat high prices.

The central bank of Sweden on Tuesday raised its key interest rate by one percentage point to 1.75%, catching almost everyone off guard as it struggles to reduce inflation that was measured at 9% in August.

consumer inflation in Japan it spiked in August to 3%, its highest level since November 1991, but well below readings of 8% or more in the United States and Europe. The Bank of Japan will hold a two-day monetary policy meeting later this week, although analysts expect the central bank to maintain its easy monetary policy.

Decisions about interest rates Norway, Swiss and the Bank of England are the following.

The markets of Europe mostly fell, while those in Asia gained ground.

(With information from AP and Reuters)

Keep reading:

In the midst of the Ukrainian counteroffensive, the Moscow Stock Exchange suffered the biggest drop since the beginning of the invasion

Source link

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button