The U.S. Federal Reserve has launched an aggressive austerity policy, raising its key interest rate by 0.5 percentage points at once. As a result, the NYSE seems to be in a ‘panic’ situation, S&P and Nasdaq fell simustaneously.
According to Reuters on the 9th (local time), the S&P 500 index fell 3.2% from the previous day to below 4000 for the first time since March last year. It fell 16.3 percent this year alone.
The Nasdaq index, which is centered on technology stocks, also fell 4.29 percent from the previous day. This is due to a sharp drop in stock prices of major companies such as Apple (-3.3%), Microsoft (-3.7%), and Tesla (-9.1%), the lowest since November 2020.
Investors are worried about how much more aggressive the Fed will be in the future to tame inflation. Earlier last week, it raised its key interest rate by 0.5 percentage points. It has doubled to moving 0.25 percentage points at a time, and it weighs on the prospect of raising the key interest rate like this for the time being.
Invesco Christina Hooper, chief strategist for global markets, explained, “The market is at the beginning of a return to a normal monetary policy environment.”
She then stressed, “An aggressive increase in the benchmark interest rate is raising fears of an economic recession that has been compounded by △ high inflation △ Russia’s aftermath of the invasion of Ukraine △ the collapse of the supply chain caused by COVID-19.”
