Wall Street on Tuesday fell the most in two months as investors fearing greater rate hikes from soaring inflation dumped stocks across the board in a defensive mode.
NEW YORK (Pakistan Point News / Sputnik - 22nd February, 2023) Wall Street on Tuesday fell the most in two months as investors fearing greater rate hikes from soaring inflation dumped stocks across the board in a defensive mode.
The Dow Jones Industrial Average, which serves as Wall Street's broadest equities indicator with stocks of 30 large US corporations, closed down 697 points, or 2.1%, at 33,130. The last time the Dow fell more in a day was on December 15, when it lost 2.3%.
The S&P 500 Index, which represents the top 500 US stocks, finished the day down 81 points, or 2%, at 3,999.
The Nasdaq Composite Index, which comprises marquee names in technology such as Amazon, Apple, Netflix and Google, settled the session down 295 points, or 2.6%, at 11,492.
Risk assets from stocks to commodities such as oil have fallen since last week after the latest readings on inflation showed an unexpected spike in price pressures that could prompt the Federal Reserve to reconsider the slower path to rate hikes it has been on since December.
A blowout US non-farm payrolls report for January, released two days after the Fed rate decision on Feb. 1, prompted investors to reevaluate expectations for how high the central bank will ultimately raise rates.
The Producer Price Index for January, issued Thursday, showed that wholesale prices rose by the most in seven months.
According to interest-rate futures, the Fed could take rates to peak above 5.2% by July, from a current high of 4.75%.
"It will only get worse as the Fed is likely to deliver more tightening into early summer. Treasury yields are surging here as a tight labor market will force the Fed to do more tightening," said Ed Moya, analyst at online trading platform OANDA.
Traders are on the lookout for Wednesday's publication of the minutes from the Fed's policy meeting on Feb. 1. The minutes will provide investors an insight into what policy-makers at the central bank were thinking when they authorized a second straight slowing of rate hikes since December. The February hike of 25 basis points compared with December's 50-basis point increase and November's 75-basis point jump.
New York Fed president John Williams is also due to speak about inflation at an event on Wednesday.
That aside, there will be revised data on fourth quarter gross domestic product and a weekly report on initial jobless claims on Thursday.
Also, personal income and spending data, due on Friday, will likely keep the Fed on its toes over inflation and the need for accordingly higher rates, analysts say, despite a slump in existing home sales in January.
