Wall Street falls sharply ahead of Fed news – zimo News


The New York Stock Exchange opened sharply lower on Wednesday as bond rates climbed to three-year highs, awaiting news from the Federal Reserve.

Around 2:00 pm GMT, the Dow was down 0.72%, the Nasdaq was down 2.11% below 14,000 and the S&P 500 was down 1.16%.

The index closed in the red on Tuesday after a U.S. central bank official made a statement about the need for a “severe” fight against inflation.

The Dow Jones Industrial Average fell 0.80% to 34,641.18. The tech-heavy Nasdaq fell 2.26 percent to 14,204.17. The S&P 500 fell 1.26% to 4,525.12.

The 10-year Treasury bill rate continued to rise on Wednesday, rising to 2.62% from 2.54% the previous day, the highest since March 2019, well before the Covid-19 pandemic.

These more hawkish remarks on interest rates from Fed Governor Lael Brainard, who typically prefers easier monetary policy, have caught the market’s attention.

Especially since the official also advocated a “rapid” reduction in the Fed’s balance sheet starting in May, another monetary tightening measure the central bank has been slow to take seriously to curb stubborn inflation.

Gregori Volokhine of Meeschaert Financial Services commented: “We can’t say we haven’t seen a serious monetary tightening, even if it is inflation-related”.

Briefing.com’s Patrick O’Hare said the views of Lael Brainard, who is seeking Senate confirmation as Fed vice chair, “have sparked a kind of outrage over U.S. Treasuries and sparked a a new tension.”

The analyst cited a “taper tantrum,” or turmoil, in the bond market in 2013, when investors reacted badly to news that the Federal Reserve planned to cut financial support that began with the 2008 financial and housing crisis.

“This will focus attention on the release of the Fed minutes,” stressed Jefferies’ Brad Bechtel.

The minutes of the central bank’s last meeting should detail the positions of Monetary Committee members on the magnitude of future rate hikes and the pace of balance sheet asset drawdown.

On Wednesday, the benchmark 30-year mortgage rate in the U.S. market crossed the 5 percent threshold for the first time in more than a decade.

Home loan applications also fell for a fourth straight week, according to data from the Mortgage Bankers Association on Wednesday.

The development of the Ukraine war remains a focus for investors as the U.S. and European Union prepare to impose a series of new sanctions on the Kremlin.

On the other hand, budget airline Spirit, which was the subject of a high-bid JetBlue after Frontier’s initial offer, fell 2.30 percent to $26.28 after rising more than 20 percent in the previous day.

JetBlue countered on Spirit for $3.6 billion, ahead of Frontier’s title, down 6.2 percent. Frontier fell 8.64%.

Twitter is losing some weight (-1.76%) after being celebrated on Wall Street in recent days when Tesla boss Elon Musk announced he had a sizable stake in the social network, making him its largest shareholder.

Seven of the 11 S&P 500 sectors were in decline, led by consumer goods (-2.46%) and information technology (-2.21%), banking (-0, 67%) and real estate (-0.34%).

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