Wall Street closed sharply lower on Thursday on concern that the Federal Reserve’s aggressive fight against inflation could hurt the US economy, and as investors fretted about falling global currency and debt markets. .
The S&P 500 lost 2.09% to 3,641.21 units, while the Nasdaq fell 2.83% to 10,738.39. The Dow Jones Industrial Average fell 1.53% to 29,228.55 units.
The Nasdaq sank to near its 2022 low in mid-June as shares of tech heavyweights like Tesla, Apple and Nvidia fell.
The S&P 500 hit lows last seen in November 2020. Down more than 8% so far this month, the benchmark is headed for its worst September since 2008.
The sale of US Treasury bonds resumed as Fed officials gave no indication that the US central bank will ease or change its plans to aggressively raise interest rates to reduce inflation.
Cleveland Fed President Loretta Mester said she sees no difficulties in US financial markets that could upset the central bank’s drive to reduce inflation through rate hikes, which have pushed the hedge fund rate the Fed to a range of 3.0% to 3.25%.
“The fear in the market is that the Fed will push us into a very deep recession, which will cause earnings to contract, and that’s why the market is falling,” said Phil Blancato, director of Ladenburg Thalmann Asset Management in New York.
Yields on many Treasuries, which are considered virtually risk-free if held to maturity, now dwarf the S&P 500’s dividend yield, which recently hovered around 1.8%, according to Refinitiv Datastream.
In Mexico, the day was marked by the central bank’s decision to raise the key interest rate again by 75 basis points to take it to 9.25%, just as the markets anticipated.
The domestic currency was trading at 20.1594 per dollar near the end of trading, depreciating 0.22% against Wednesday’s Reuters benchmark price.
“The volatility and uncertainty are still present in the global financial markets due to the persistent doubts about the economic management of the United Kingdom, the tensions due to the war in Ukraine and the weak prospects for global growth,” said the firm CI Bank.
The peso followed the same trend as the rest of the main currencies in the region, as well as the US dollar.
The benchmark S&P/BMV IPC stock index fell 0.75% to 45,102.55 points.
The collapse of 34.22% to 10.86 pesos of the titles of Sites Latin America, of Carlos Slim, in its debut on the stock market stood out.
The day in Europe was also tough. The STOXX 600 index lost 1.8%, while the euro and sterling – hit over the last week by British debt concerns – only recovered part of the ground, rising 0.1% and 0.7%, respectively.
Talk of currency intervention in China was also gaining momentum, while German inflation hit its highest level in more than a quarter century in September.
“The market wouldn’t mind a bit of stability, it’s gotten a bit unpredictable,” said Agnes Belaisch, chief Europe strategist at Barings Investment Institute.
The dollar index, which compares the greenback to a basket of six major currencies, was back near its recent 20-year high after posting its worst session in 2-1/2 years on Wednesday.
Recession angst, combined with supply woes and a strong dollar, sent oil prices swinging after gaining more than $3 in the previous session. In their last price they operated with hardly any changes.
With information from Reuters.
