Clicky

  • Login
  • Register
  • Submit Your Content
  • Contact Us
Thursday, August 22, 2024
World Tribune
No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
Submit
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
No Result
View All Result
World Tribune
No Result
View All Result

Stock market crash: ‘The Fed is seizing defeat from the jaws of victory’

August 2, 2024
in Business
Reading Time: 4 mins read
A A
Stock market crash: ‘The Fed is seizing defeat from the jaws of victory’
0
SHARES
ShareShareShareShareShare

Stock market crash: ‘The Fed is seizing defeat from the jaws of victory’

Stocks are tumbling Friday on worries the U.S. economy could be cracking under the weight of high interest rates meant to whip inflation.

READ ALSO

Star fund manager takes leave amid accusations of cherry picking

This is the No.1 thing jeopardizing your relationship

The S&P 500 was sinking by 2.5% in midday trading, potentially on pace for its worst day since 2022, and on track for its first back-to-back loss of more than 1% since April. The Dow Jones Industrial Average was down 954 points, or 2.4%, as of 11:30 a.m. Eastern time, and the Nasdaq composite was 2.9% lower as a sell-off for stocks whipped all the way around the world back to Wall Street.

A report showing hiring by U.S. employers slowed last month by much more than economists expected sent fear through markets, with both stocks and bond yields dropping sharply. It followed a batch of weaker-than-expected reports on the economy from a day earlier, including a worsening for U.S. manufacturing activity, which has been one of the areas hurt most by high rates.

It was just a couple days ago that U.S. stock indexes jumped to their best day in months after Fed Chair Jerome Powell gave the clearest indication yet that inflation has slowed enough for cuts to rates to begin in September.

Now, worries are rising the Fed may have kept its main interest rate at a two-decade high for too long. A rate cut would make it easier for U.S. households and companies to borrow money and boost the economy, but it could take months to a year for the full effects to filter through.

“The Fed is seizing defeat from the jaws of victory,” said Brian Jacobsen, chief economist at Annex Wealth Management. “Economic momentum has slowed so much that a rate cut in September will be too little and too late. They’ll have to do something bigger than” the traditional cut of a quarter of a percentage point ”to avert a recession.”

Traders are now betting on a better than three-in-four chance that the Fed will cut its main interest rate by half a percentage point in September, according to data from CME Group. That’s even though Powell said Wednesday that such a deep reduction is “not something we’re thinking about right now.”

U.S. stocks had already appeared to be headed for losses before the disappointing jobs report thudded onto Wall Street.

Several big technology companies turned in underwhelming profit reports, which continued a mostly dispiriting run that began last week with results from Tesla and Alphabet.

Amazon fell 9.9% after reporting weaker revenue for the latest quarter than expected. The retail and tech giant also gave a forecast for operating profit for the summer that fell short of analysts’ expectations.

Intel dropped even more, 26.5%, after the chip company’s profit for the latest quarter fell well short of forecasts. It also suspended its dividend payment and said it expects to lose money in the third quarter, when analysts were expecting a profit.

Apple was holding steadier, up 2%, after reporting better profit and revenue than expected.

Apple and a handful of other Big Tech stocks known as the “ Magnificent Seven ” have been the main reasons the S&P 500 has set dozens of records this year, in part on a frenzy around artificial-intelligence technology. But their momentum turned last month on worries investors had taken their prices too high and expectations for future growth are too difficult to meet.

Friday’s losses for tech stocks dragged the Nasdaq composite down by more than 10% from its record set in the middle of last month.

Helpfully for Wall Street, other areas of the stock market beaten down by high interest rates had been rebounding at the same time tech stocks were regressing, particularly smaller companies. But they tumbled too Friday on worries that a fragile economy could undercut their profits.

The Russell 2000 index of smaller stocks dropped 4.2%, more than the rest of the market.

In the bond market, Treasury yields fell sharply as traders raised their expectations for how deeply the Federal Reserve would have to cut interest rates. The yield on the 10-year Treasury fell to 3.81% from 3.98% late Thursday and from 4.70% in April.

Amid all the fear, some voices on Wall Street were still advising caution.

“While worries of a policy mistake are rising, one negative miss shouldn’t lead to overreaction,” according to Lara Castleton, U.S. head of portfolio construction and strategy at Janus Henderson Investors.

She points out the U.S. economy is still growing, and inflation is still slowing. The S&P 500, meanwhile, isn’t far off its record set two weeks ago. “Equities selling off should be seen as a normal reaction, especially considering the high valuations in many pockets of the market. It’s a good reminder for investors to focus on the earnings of companies going forward.”

In stock markets abroad, Japan’s Nikkei 225 dropped 5.8%. It’s been struggling since the Bank of Japan raised its benchmark interest rate on Wednesday. The hike pushed the value of the Japanese yen higher against the U.S. dollar, potentially hurting profits for exporters and deflating a boom in tourism.

Chinese stocks fell week as investors registered disappointment with the government’s latest efforts to spur growth through various piecemeal measures, instead of hoped-for infusions of broader stimulus, while stock indexes dropped by more than 1% across much of Europe.

Commodity prices have also had a rough ride this week. Oil prices surged after the killings of leaders of Hamas and Hezbollah that fueled fears that a widening conflict in the Middle East could disrupt the flow of crude.

But prices fell back Thursday and Friday on worries that a weakening economy will burn less fuel. A barrel of benchmark U.S. crude tumbled 3.7% Friday to bring its loss for the week to 4.8%.

Recommended Newsletter: CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about–and from inside–the C-suite. Subscribe Now.

Credit: Source link

ShareTweetSendSharePin
Previous Post

Global sell-off, FTSE 100, Bank of England rate cut

Next Post

The PlayStation 5 is $50 off, plus the rest of the week’s best tech deals

Related Posts

Star fund manager takes leave amid accusations of cherry picking
Business

Star fund manager takes leave amid accusations of cherry picking

August 22, 2024
This is the No.1 thing jeopardizing your relationship
Business

This is the No.1 thing jeopardizing your relationship

August 22, 2024
Forget the 30-year mortgage: The 40-year mortgage needs to become the new American standard, CEO says
Business

Forget the 30-year mortgage: The 40-year mortgage needs to become the new American standard, CEO says

August 21, 2024
Too anxious to fall asleep?
Business

Too anxious to fall asleep?

August 21, 2024
France to donate 100,000 mpox vaccines as nation prepares for outbreak at home
Business

France to donate 100,000 mpox vaccines as nation prepares for outbreak at home

August 21, 2024
The EU wants no corner of the digital sphere left untouched, warning X and AI could be next
Business

The EU wants no corner of the digital sphere left untouched, warning X and AI could be next

August 21, 2024
Next Post
The PlayStation 5 is  off, plus the rest of the week’s best tech deals

The PlayStation 5 is $50 off, plus the rest of the week's best tech deals

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

What's New Here!

Olympics organizers create Olympic Esports Games

Olympics organizers create Olympic Esports Games

July 24, 2024
NASA astronauts waiting for return decision

NASA astronauts waiting for return decision

August 15, 2024
Apple’s 13-inch M3 MacBook Air is 0 off right now and cheaper than ever

Apple’s 13-inch M3 MacBook Air is $250 off right now and cheaper than ever

August 5, 2024
Yankees’ series opener with Rangers rained out in the Bronx

Yankees’ series opener with Rangers rained out in the Bronx

August 9, 2024
Australian calculator predicts long COVID risk and more briefs

Australian calculator predicts long COVID risk and more briefs

August 9, 2024
Nissan trials cooling white paint to combat climate-change-induced heat

Nissan trials cooling white paint to combat climate-change-induced heat

August 7, 2024
Digital Therapeutics Alliance CEO joins FDA Digital Health Advisory Committee and more digital health news

Digital Therapeutics Alliance CEO joins FDA Digital Health Advisory Committee and more digital health news

August 5, 2024

About

World Tribune is an online news portal that shares the latest news on world, business, health, tech, sports, and related topics.

Follow us

Recent Posts

  • Star fund manager takes leave amid accusations of cherry picking
  • FTX Sam Bankman-Fried former partner Ryan Salame seeks to void guilty plea
  • Noah Lyles gushes over ‘fighter’ girlfriend Junelle Bromfield
  • Microsoft’s revised Recall AI feature will roll out to beta testers in October

Newslatter

Loading
  • Submit Your Content
  • Contact Us
  • Privacy Policy
  • Terms of Use
  • DMCA

© 2024 World Tribune - All Rights Reserved!

No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food

© 2024 World Tribune - All Rights Reserved!

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In