Investors on Wall Street will cut risks – sending stock markets lower

It was a positive Thursday on US stock exchanges, and the Nasdaq Technology Index rose nearly 1 percent. The Nasdaq has now gained nearly 40 percent since the new year, but it has been uncertain lately if the peak has been reached.

This is how trading ended on the leading US stock market indices on Friday:

• The broad S&P 500 index fell 0.77 percent.
• The Dow Jones Industrial Average fell 0.65 percent.
• The Nasdaq Technology Index fell 1.01 percent.

Stock markets have rallied despite rising inflation, but ever-increasing interest rates may finally be starting to work. Higher interest rates make it more attractive for investors to put their money in government securities rather than the stock market, and government bonds are often seen as a safe haven in turbulent times, even if the yield is not good.

As recently as this week, Federal Reserve Chairman Jerome Powell announced that the central bank may not have finished raising interest rates in this cycle.

The market has not yet caught up with the delayed impact of the Fed’s more hawkish policy. Based on the strong development we’ve seen in the markets recently, we’ll look at reducing risk, says Emily Rowland, investment strategist at John Hancock Investment Management, according to Bloomberg News, reproduced by TDN Direkt.

The fear at the other end is that aggressive interest rate policy from central banks will drive the global economy into recession, simply because access to capital and investment dries up and consumers stop spending money. The weak activity figures out of the Euro-Zone on Friday add to these concerns in particular.

For listed businesses and companies that make their living selling goods and services, a decline in economic activity is bad news, and investors react by selling and lowering share prices.

The stock market decline in the US follows another weak day on European stock exchanges. The price of oil has also fallen significantly in recent days and North Sea oil is trading on Friday afternoon for $72.50 per barrel.(conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We’d like you to share our statuses using links that lead directly to our pages. Reproduction or other use of all or part of the Content may be made only with written permission or as permitted by law. For more terms see here.