Stocks recorded a decline on Tuesday, affected by concerns regarding the decisions of the US Federal Reserve on Wednesday, which is expected to raise interest rates and intervene violently, perhaps by 75 points, in order to curb inflation.
Wall Street’s major indices failed to maintain the rise they started in Tuesday’s session, a day following global indices declined due to fears that the markets would enter a recession as a result of inflation, while investors were relieved by a less-than-expected rise in core producer prices.
Producer Prices
US producer prices rose strongly in May amid a jump in the cost of energy products, indicating that inflation may remain elevated for some time. The US Labor Department said Tuesday that the producer price index for final demand rose 0.8% last month following rising 0.4% in April, and over the twelve months to the end of May, the producer price index jumped 10.8% following a 10.9% increase in April. / April, and economists polled by Archyde.com had expected the producer price index to rise 0.8% in May and jump 10.9% on an annual basis, and government data showed a significant increase in consumer prices in May, which raised fears that inflation in The world’s largest economy is likely to become entrenched.
Monday trades
US stocks tumbled Monday and the Standard & Poor’s 500 index confirmed that it is in a bear market, with growing fears that expected active interest rate increases from the Federal Reserve will push the economy into a recession.
Standard & Poor’s has fallen for four consecutive sessions, now down more than 20 percent from its latest record closing high on Jan. 3.
And closed all the major sectors in Standard & Poor’s with sharp losses.
Markets are under pressure this year as prices rise, including a jump in oil prices partly due to the war in Ukraine, which puts the Federal Reserve on course to take aggressive monetary tightening action.
The Federal Reserve is due to release its next monetary policy announcement on Wednesday and investors will focus on any indications of how far the Fed will go to raise interest rates.
Major technology companies, such as Apple, Microsoft and Amazon.com, were among the biggest losers on the Standard & Poor’s 500 Index, with the benchmark 10-year US Treasury yield hitting its highest level since April 2011 at 3.44 percent. Growth stocks are more likely to see their earnings suffer in a high interest rate environment.
The Standard & Poor’s 500 closed down 149.91 points, or 3.85 percent, to 3750.95 points, while the Nasdaq Composite Index fell 526.82 points, or 4.65 percent, to close at 10,813.20 points. The Dow Jones Industrial Average ended the trading session on Wall Street, down 857.70 points, or 2.73 percent, to 30,535.09 points.
