October 4, 2022

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Technology and banking stocks lower US stock markets

Technology and banking stocks lower US stock markets

All leading US stock market indices Significantly on Wednesday evening, after the interest rate decision of the US central bank – Federal Reserve. On Thursday, stock markets continued to fall, with the Nasdaq tech index falling the most, which fell 1.3 percent at 20:00 NST. The Dow Jones Industrial Average was virtually unchanged, while the broad S&P 500 was down 0.5%.

Gloomy from US Central Bank President Jerome Powell.

Gloomy from US Central Bank President Jerome Powell. (Photo: Jacquelyn Martin/AP/NTB)

Higher interest rates mean that risky capital has almost completely disappeared, which is especially affecting tech companies, as more important questions are now being asked about the valuation of many of these companies. On Thursday, banking and financial stocks fell significantly, among other things on concerns about loan and investment banking losses on the back of lower activity expectations in areas such as asset management, brokerage and mergers and acquisitions.

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Since mid-August alone, the three US stock indexes, the Dow Jones, the Standard & Poor’s 500 and the Nasdaq, have fallen by more than ten percent, and are approaching their lowest levels as of June of this year. The worst thing happened to tech stocks on the Nasdaq, which are down about 15 percent since mid-August.

US stock markets have now fallen in seven of the last nine trading days.

High interest rates, inflation, market turmoil related to energy prices and geopolitical mood are affecting the markets and making investors anxious.

Message from Fed Chair Powell Wednesday evening also not misunderstood. He predicted a war winter and sharply raised interest rates trajectory for 2022 and 2023 to about 4.6 percent at the end of next year. The interest rate came after Wednesday’s triple increase of 3.25 percent, up from a record low of 0.25 percent just a few months ago.

Anders Johansen, chief strategist at Danske Bank, is among many economists who now believe the US is on the brink of a recession, that is, the economy is shrinking.

“The Fed is planning a hard landing – a soft landing is almost impossible. Powell’s acknowledgment that economic growth will be below trend for a while should translate into the central bank calling for a recession. It will be tough times from now on,” wrote the chief strategist at Principal Global Investors, Seema Shah, according to Bloomberg, in a note prepared by TDN Direkt.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links that lead directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.

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