NEW YORK: Wall Street skidded into the red yesterday, as ongoing investor fears about sharp interest rate increases drove all three major indices to big losses by the end of trading.
The benchmark Dow Jones Industrial Average fell 2.4% or more than 800 points to finish at 33,240.18, while the broad-based S&P 500 dropped 2.8% to 4,175.20.
The tech-rich Nasdaq Composite Index sunk 4% to close at 12,490.74 amid a broader sell-off in the sector.
US equities got a reprieve on Monday but then resumed a downward slide that began last week, as expectations that the Federal Reserve’s war on inflation may take interest rates so high it tips the world's largest economy into a recession.
“The markets continued to grapple with several headwinds including expected Fed aggressiveness moving forward, the ongoing war in Ukraine, inflation pressures, and Covid-related lockdowns in China, and if it portends to an economic slowdown,” analysts at Charles Schwab investment bank said.
Microsoft and Google-parent Alphabet, which were reporting earnings after the close, fell 3.7% and 3%, respectively.
Meanwhile, Twitter fell 3.9% in the wake of billionaire Elon Musk’s deal to buy the company and take it private.
The generally positive tone to the corporate earnings season has not been enough to allay investor fears.
“There certainly is some concern about the possibility that even if companies report earnings that are above expectations, that there’s going to be a tendency for them to lower guidance going forward,” Tom Cahill of Ventura Wealth Management told AFP.
And more lockdowns in China “could lead to further supply chain constraints”, he said. – AFP