The Business Times

US: Wall Street closes sharply lower, S&P 500 falls 3.2%

Published Fri, Jun 17, 2022 · 05:51 AM

US equities dropped sharply Thursday (Jun 16), a day after the Federal Reserve made an aggressive move to bring down inflation and instill confidence in the markets and other central banks followed.

The Dow Jones Industrial Average lost 741.5 points, ending down 2.4 per cent at 29,927.07 - its first close below 30,000 since January 2021.

The broad-based S&P 500, which entered a "bear market" earlier this week following the latest red-hot US inflation data, fell 3.3 per cent to 3,666.78 at the closing bell.

Meanwhile, the tech-rich Nasdaq Composite Index fell 4.1 per cent to 10,646.10.

The Fed on Wednesday announced a super-sized, 3-quarter point interest rate hike - the first such increase since November 1994 - after economic data in recent days showed inflation strengthening and consumer confidence weakening.

Fed Chair Jerome Powell stressed that it is "essential" to lower inflation from the highest level in more than 40 years, and said the central bank could raise the benchmark lending rate by another 0.75 percentage points in July.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

VIEW ALL

He emphasised that the Fed was not trying to induce a recession, but that aggressive measures were needed to counter rising prices.

Markets had initially welcomed the move, but stocks were in the red from the start Thursday as concerns about recession mount.

"Wall Street was quick to fade yesterday's post-FOMC rally as the other major central banks are turning very hawkish with their respective inflation battles," Oanda's Edward Moya said.

Other major central banks followed in the Fed's footsteps, including the Bank of England, as rising prices amid the war in Ukraine become a major challenge.

"US economic data is showing a deceleration in activity, which is making Wall Street bring forward their recession calls," Oanda said.

Maris Ogg from Tower Bridge Advisors warned that rising interest rates could have an adverse effect on consumer confidence.

But if that fails to slow the pace of price increases, "it doesn't seem like they'll stop despite the signs that people's confidence is down," she told AFP. AFP

READ MORE

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to  t.me/BizTimes

Capital Markets & Currencies

SUPPORT SOUTH-EAST ASIA'S LEADING FINANCIAL DAILY

Get the latest coverage and full access to all BT premium content.

SUBSCRIBE NOW

Browse corporate subscription here