Wall Street stock markets suffered heavy losses during trading yesterday, erasing the solid gains from the previous day that followed the regular meeting of the Federal Reserve.
Yesterday, US stock indexes rose by about 3% after the Fed raised its expected base rate by 50 basis points and signaled that it does not intend to resort to an even more aggressive rise in interest rates at any of its next meetings.
However, today’s session heightened investor fears that the tightening policy of the US Federal Reserve will fail to stop rising inflation, while the yield on 7.10 and 30-year US government bonds rose above 3%, which heightened fears for economic stagflation (weak economic growth with sharply rising inflation). The yield on 10-year securities increased to 3.04% – the highest level since the last months of 2018.
The economic problems in China are also negatively affected by the ongoing policy of the Beijing authorities on the “zero coronavirus” and the related lockdowns in various major cities and regions of the Asian country. Russia’s ongoing military invasion of Ukraine and related Western sanctions are also putting the European economy to a serious test.
The DJIA blue-chip index lost as much as 1,063 points (down 3.12%), falling shortly before the end of trading by nearly 1,300 points. The broad S&P 500 index fell 3.56% of its value, and the Nasdaq Composite technology index fell 4.99%.
This is the most solid decline in all three leading stock indices in nearly two years, with at some point in trading on Thursday, all three indices traded around and even below their lowest levels for 2022.
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