U.S. inflation data that surpassed projections caused Wall Street’s major stock indices especially tech stocks to plummet while benchmark bond yields soared.
Indesk Stocks Under Pressure
The Wall Street market is in retreat with the Dow Jones Industrial average index falling 1.47% at 35,241.59 points, the S&P 500 losing 1.81% at 4,504.06 and the Nasdaq Composite down 2.1% at 14,185.64.
For 2022 alone, the S&P is now down 5% while the Nasdaq is down 9% as well as technology stocks that previously posted double -digit gains fell 2.75% overall.
MSCI’s worldwide equity index plunged from gains recorded in the previous session.
The pan-European STOXX 600 index was down 0.2% while bond yields soared and the FTSE 100 was up 0.38%.
Anxiety Sentiment is Back Contagious
Consumer price data that strengthened in January, marking the biggest annual increase in inflation in 40 years, has sparked discussions in financial markets about a 50 basis point interest rate hike by the Federal Reserve (Fed) next month, March.
As a result, bond yields soared as investors expected the Fed to begin tightening monetary policy as well as expectations that the US central bank would end its balance sheet.
The yield of the US 10 -year benchmark note reached the 2% level for the first time since August 2019.
Currency markets are expecting the first rate hike by the European Central Bank (ECB) by June, after the ECB president signaled a hike last week, in addition to the Bank of Japan (BOJ) announcing it would buy unlimited 10 -year government bonds at 0.25%.
The Japanese yen was up 0.51% against the volatile dollar while the Euro was down 0.14%.
The commodity sector saw gold prices retreat from gains by 0.37% to $ 1,825.69 while US gold futures remained at $ 1,837.40.
Brent crude was down 0.2% at $ 91.41 a barrel while US crude was up 0.3% at $ 89.88 a barrel.
