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Wall Street continues to correct the impact of worries about the Fed's rate hike

Friday, September 23, 2022


Wall Street continues to correct the impact of worries about the Fed's rate hike
Wall Street continues to correct the impact of worries about the Fed's rate hike

edisiindonesia.com- New York - The United States (US) stock market or Wall Street posted a correction for the third day in a row on Thursday, September 22. Pressure on Wall Street is due to increasing concerns that aggressive interest rate hikes by the US central bank or the Federal Reserve (the Fed) will push the economy into recession.

At the close of Wall Street trading, the S&P 500 index slipped 0.8 percent to 3,757.99. The Nasdaq index fell 1.4 percent to 11,066.81. The Dow Jones index slumped 107.10 points, or 0.3 percent, to 30,076.68.

In Thursday's trading this week, the corrective benchmark index pushed the weekly decline. The Dow Jones index is down about 2.42 percent so far. The S&P 500 and Nasdaq indexes fell 3 percent and 3.3 percent, respectively.

On the other hand, bond yields jumped on Thursday trading this week. Yields on US 10-year and two-year bonds scored highs. These yields reached their highest levels since February 2011 and October 2007 respectively.

The movement in Thursday's trading this week also occurred after the US central bank maintained its aggressive stance on Wednesday this week.

The Fed has implemented a 75 basis point hike in its benchmark interest rate and is forecast to bring interest rates to 4.4 percent by the end of 2022. Other central banks around the world are also following the Fed's move to implement rate hikes despite the potential impact on the economy.

Stocks on Wall Street

Growth-oriented technology and semiconductor stocks tended to be depressed on Thursday this week. This is in line with fears of slowing economic growth. Industrial and consumption stocks underperformed the S&P 500. Industrial and consumption stocks shed 1.7 percent and 2.2 percent, respectively.

"The Fed is paving the way for central banks around the world to raise interest rates, and that will lead to a global recession, and how severe that will be will be determined by how long inflation is down," said Oanda analyst Ed Moya as quoted by CNBC, Friday ( 23/9/2022).

Meanwhile, other defensive stocks posted better performances on the back of shares of drug and consumer staples producers. Eli Lily shares rose 4.9 percent after UBS raised its stock rating recommendation.

Airline Stocks Hit

Caesars Entertainment shares slumped 9.4 percent and were the worst performer in the sector. Travel stocks including groups Expedia and MGM Resorts fell 7.1 percent and 6.6 percent, respectively. Wynn Resorts and Marriott International each fell more than 5 percent.

Airline shares also took a hit with United, American Airlines and Delta each down 4 percent. FedEx shares were up 2.8 percent in Thursday afternoon trading. The company will also repurchase USD 1.5 billion of shares during the fiscal year and raise prices for customers on January 2, 2023. Meanwhile, Novavax shares fell 13.9 percent after JPMorgan downgraded Novavax and cut its price target.

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