Wall Street shares sank Thursday morning, reversing the previous session’s gains as markets reevaluated the Federal Reserve’s moves to tighten monetary policy in response to inflation.
Near 1500 GMT, the Dow Jones Industrial Average was down 2.7 percent at 33,157.59.
The broad-based S&P 500 fell 3.1 percent to 4,166.29, while the tech-rich Nasdaq Composite Index fell 4.3 percent to 12,409.31.
The central bank’s policy meeting concluded on Wednesday with a half-point increase as expected, but there was no sign the Fed was ready to hike three-quarters of a point in the future, amid panicked markets about higher borrowing costs. A reassuring sign for
Major indices almost closed the day’s trading in a relief rally after Fed Chair Jerome Powell expressed confidence that the US central bank could engineer a “soft landing” that could control inflation without sending the economy into recession. up to three percent.
But the markets were re-evaluating the situation on Thursday.
Briefing.com’s Patrick O’Hare said last session’s rally was fueled by “a counter-intuitive catalyst” and added that higher interest rates have not traditionally been a positive for equities.
“While the Fed aims to slow demand with rising interest rates in an effort to moderate inflation, it is because income growth is also slowing,” he wrote in the analysis.
“Market participants should be careful what they wish for and rally around – or at least be more sensible than they do because the Fed is still getting started.”
This story has been published without modification in text from a wire agency feed.