The rally turned into a sharp decline on Wall Street after interest rate warnings

The rally turned into a sharp decline on Wall Street after interest rate warnings

It looked very bright. Tesla, which met market expectations when the company presented its first-quarter accounts on Wednesday, is up as much as ten percent since the start. All three indicators were in a clearly positive level with an increase that ranged between 0.7 and 1.2 percent.

But then Wall Street lost momentum and watched close to zero before the warning of a sharp interest rate hike came.

0.5 percent in May

Jerome Powell, Federal Reserve Chairman, said large interest rate increases are possible as early as next month to bring inflation down to around 8.5 percent.

“In my opinion, it is appropriate to move at a slightly faster pace as interest rates go up,” Powell said when he served on a panel at the International Monetary Fund and the International Monetary Fund.

He proposed raising the central bank’s key interest rate by 0.5 percentage point in May.

“I would say 50 basis points will be on the table at the May meeting,” he told CNBC.

“Our goal is to use our tools to bring back demand and supply step by step, so that inflation goes down without triggering a recession. I don’t think you’ll hear anyone at the Fed say it’s going to be easy. It’s going to be very difficult,” Powell said.

Then the interest rate on the so-called ten-year bonds, government bonds with a ten-year term, rose by nine basis points to 2.92 percent. This is the highest since 2018.

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Stock prices fell sharply. The technology-heavy Nasdaq index closed down 2.1 percent at 10 p.m. Norwegian time, the Dow Jones Industrial Average fell 1.1 percent and the broad S & P500 index fell 1.5 percent.

Teslas, which started its day with a price increase of more than 10%, ended up with a much more cautious 3%.

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Hanisi Anenih

Hanisi Anenih

"Web specialist. Lifelong zombie maven. Coffee ninja. Hipster-friendly analyst."

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