Dow, Nasdaq plunge sharply on account of US Fed hike, markets expected to remain volatile

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The Federal Reserve’s decision to hike interest rates rattled Wall Street on Thursday as major US stocks tanked at the stock market.

The S&P 500, Dow and Nasdaq plunged sharply, with losses accelerating during intraday trading.

The S&P 500 fell by 3.7 per cent, the Dow Jones Industrial Average tumbled 1,100 points, or 3.3 per cent, to 32,945 and the Nasdaq lost 5 per cent.

Major tech stocks tanked at Nasdaq, with Google-parent Alphabet Inc, Apple Inc, Microsoft Corp, Meta Platforms, Tesla Inc and falling between 4. 5 per cent and 6.5 per cent

A day earlier, the blue-chip index posted its best single-session gain since May 2020, rising 2.99 per cent.

The bloodbath in the US was also reflected in European stocks as fears of a recession, suggested by the Bank of England after it hiked rates, dampened enthusiasm from Federal Reserve Chair Jerome Powell’s remarks on Wednesday.

He had said that policymakers were not considering 75 basis-point moves in the future.

The yield on 10-year Treasury notes rose 16.9 basis points to 3.084 pre cent, while inflation-hedge gold bounced higher after Powell also emphasized risks to the economy from soaring inflation.

Watch | Fed raises interest rates by 50-bps

“It’s a very messy environment for investors right now,” Anthony Saglimbene, global market strategist at Ameriprise Financial, told Reuters.

“There`s an overall negative sentiment in the market.”

He expects the markets to remain volatile until there is a clear picture on Fed rate policy and its trajectory later this year.

The dollar index rose 1.131 per cent, rebounding after falling sharply on Wednesday following the Fed`s rate hike. It is up more than 7 per cent so far this year.

There was some respite in China where shares recovered some ground, gaining 0.7 per cent as mainland markets resumed trade after a three-day holiday.

Investors also cheered a pledge by China’s central bank for more monetary policy support to help businesses badly hit by the latest COVID-19 outbreak.

Oil prices rose as a stronger dollar offset supply concerns after the European Union`s plans for new sanctions against Russia, including an embargo on crude in six months.

(With inputs from agencies)