Lexington-Fayette, Kentucky 2022-05-19 20:42:48 –
The downturn in key indices deepened as stock prices fell in the morning trading on Wall Street on Thursday and sustained high inflation continued to weigh on the economy.
The benchmark for many index funds, the S & P 500, is breaking out of its biggest dip in nearly two years. It’s down another 0.9%, almost 19% from the record high set earlier this year. This is shy at the 20% point that defines the bear market. The last bear market occurred just two years after the outbreak of the virus began.
The Dow Jones Industrial Average fell 400 points (1.3%) to 31,094 at 11:07 am in the east, while the Nasdaq fell 0.1%.
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Rising interest rates, high inflation, the war in Ukraine, and the slowdown in the Chinese economy have led investors to rethink the prices they are willing to pay for a wide range of stocks, from tech companies to traditional car makers. Investors are worried that rising inflation, which can hurt grocery shopping and car fullness, is squeezing corporate profits.
After losing a quarter of its value in a surprisingly weak profit report, the target fell another 5% in a day. Department store Coles hasn’t changed much since joining the list of retailers who reported slumping earnings or lowering forecasts due to inflationary pressures.
Wall Street is also worried about the Federal Reserve’s plans to combat the highest inflation in 40 years. The Federal Reserve is aggressively raising interest rates, and investors are concerned that if the central bank raises or raises interest rates too early, it could cause a recession.
10-year Treasuries have been reduced from 2.88% in the second half of Wednesday to 2.81%, but are generally rising as investors prepare for higher interest rate markets. It also boosts mortgage rates and helps slow home sales.
A pile of concerns on Wall Street has caused very volatile transactions and large fluctuations between profits and losses on a particular day.
Technology stocks are some of the most volatile holdings. This sector includes big names like the acclaimed Apple and tends to move the market up and down more strongly. The sector has been particularly hit by the Fed’s policy shift to raise interest rates. Low interest rates help support investments that are considered risky, such as tech stocks, and high interest rates weaken the incentive to take that risk.
Technology stocks once again weighed heavily on Thursday’s market. Cisco Systems fell 13.2% after router and switch sellers lowered their profit forecasts within supply chain constraints.
Household goods companies, grocery store owners, and food producers have fallen sharply. General Mills was down 3.5% and Tyson Foods was down 1.3%.
Retailers and other businesses that rely on direct consumer spending were mostly mixed. Bath & Body Works fell 9.2% after lowering its annual profit forecast. Amazon rose 1.4%.
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