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    NewsUSA and CanadaWall Street closes lower after banks raise rates

    Wall Street closes lower after banks raise rates

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    A man rides a bicycle past the New York Stock Exchange, Wednesday, Sept. 21, 2022. (AP Photo/Peter Morgan)

    AP

    Stock prices fell again on Thursday, compounding Wall Street’s losses so far this week, after central banks around the world raised interest rates to fight inflation.

    The S&P 500 fell 0.8%, its third straight day down. The index accumulates losses of 3% so far this week.

    The Dow Jones Industrial Average fell 0.4% and the Nasdaq Composite fell 1.4%. The Russell 2000 index of small businesses lost 2.3%, a sign of investors’ concern about the state of the economy. The main indicators of the New York Stock Exchange are heading for their fifth weekly decline in the last six weeks.

    Bond yields were mostly up. The yield on the 2-year Treasury bond, which tends to follow what the Federal Reserve is expected to do, rose significantly from 4.02% to 4.11%. It is at its highest level since 2007.

    The 10-year Treasury bond yield, which influences mortgage rates, soared from 3.51% to 3.70%.

    The selloff in equities reflects concerns among investors that the Fed may have to take more aggressive action than it has been signaling to finally get inflation under control, said Barry Bannister, director of capital strategies at Stifel. Such a scenario is unlikely if prices stabilize and fall, but that process could take more than a year, he stressed.

    “The question is: what is the level of patience for both the Fed and the market?” he commented.

    Central banks in Europe and Asia raised interest rates a day after the Federal Reserve made a further significant hike in interest rates and signaled more to come.

    Britain’s central bank raised its key interest rate by another half percentage point. In Switzerland, the benchmark rate rose by its highest margin to date: 0.75 percentage point, and he said he could not rule out further hikes. The central banks of Norway and the Philippines also raised their rates.

    The Fed and other central banks are raising interest rates to make borrowing more expensive. The goal is to slow economic growth enough to control inflation, but not enough to push the economy into recession. Wall Street is concerned that the Fed is putting the brakes too hard on an already slowing economy, increasing the chances of a recession.

    “There are no easy answers when you have the most powerful entity in the world, the Federal Reserve, committed to going down this path of rate hikes,” said Michael Antonelli, market strategist at Baird.

    The S&P 500 lost 31.4 points to settle at 3,757.99 on Thursday. The gauge is now at its lowest level since mid-June and has fallen more than 21% so far this year.

    The Dow lost 107.10 points to close at 30,076.68, while the Nasdaq fell 153.39 points to 11,066.81.

    The Russell 2000 lost 39.85 points and settled at 1,722.31.

    Losses were broad based and concentrated among retailers and technology, financial and industrial stocks. Starbucks fell 4.4%, Nvidia 5.3%, American Express 3.8% and UPS 3.4%.

    Healthcare stocks were one of the few bright spots. Johnson & Johnson rose 1.8%.

    ___

    Associated Press writers Joe McDonald and Matt Ott contributed to this report.



    Source: El Nuevo Herald

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