There are growing fears on Wall Street that the Fed will continue to hike interest rates in large increments. After the long weekend, the US stock exchanges are making heavy price losses. At the same time, US government bond yields are rising significantly.
The US stock exchanges slipped after positive economic data and the resulting fears of interest rate hikes. The Dow Jones index of standard values closed 2.1 percent lower on Tuesday at 33,129 points. The tech-heavy Nasdaq fell 2.5 percent to 11,492 points. The broad S
Positive economic data sparked fears of rate hikes after the long weekend. The purchasing managers' index (PMI) rose to 50.2 points from 46.8 in January, the highest level in eight months. As a result, government bonds flew out of the depots. The yield on the 10-year US Treasury bond rose eight basis points to 3.919 percent. In the course of trading, the yield had temporarily risen to its highest level since the beginning of November.
"Every time the market tries to convince itself that the Federal Reserve is about to take its foot off the brakes, investors are faced with reality," said Tom Plumb, portfolio manager of the Plumb Balanced Fund. In all likelihood, the market hope that the US Federal Reserve would pause interest rate hikes in the next six months will not be fulfilled.
Investors are also assuming that Wednesday's release of the minutes of the most recent Fed meeting will point to a further tightening of US monetary policy. US growth stocks such as Amazon, Microsoft and Apple, which are particularly dependent on interest rate policy, then lost between 2.1 and 2.7 percent.
Shares in the world's largest retailer, Walmart, went on a rollercoaster ride after earnings guidance fell short of market expectations. At times they lost up to almost three percent, but were able to recover to a plus of 0.6 percent by the end of trading. "The economic outlook remains very worrying and uncertain," said Chief Financial Officer John David Rainey. A planned wage increase and increased demand for cheap products due to inflation would impact profit margins in the current financial year.
"Walmart numbers are an early warning system for consumer behavior in general," said Art Hogan, chief market strategist at B. Riley Financial. In their wake, rivals like Target and Macy's lost four and 6.5 percent, respectively. The largest US hardware store chain, Home Depot, also disappointed with a gloomy forecast. The titles fell by more than seven percent and thus moved to the bottom of the Dow Jones Index. The reason for an expected drop in profits in the single-digit percentage range is falling demand due to inflation and increased costs, the group said.
