Stocks dropped across global financial markets after a wave of rate hikes from central banks this week, with the Federal Reserve and the European Central Bank warning of more pain to come.
(Bloomberg) — Stocks dropped across global financial markets after a wave of rate hikes from central banks this week, with the Federal Reserve and the European Central Bank warning of more pain to come.
About 96% of S&P 500 stocks fell. The Nasdaq 100 also started Thursday’s session lower. Both indexes ended Wednesday in the red after Fed Chair Jerome Powell reiterated his hawkish stance and policymakers signaled a peak rate that was above market expectations. Europe’s equity benchmark, the Stoxx 600, pushed lower after the ECB saw 2024 inflation higher than previously forecast.
The US dollar strengthened. The euro rose after ECB President Christine Lagarde said the central bank needs to do more than traders priced in. Britain’s pound slid after an expected half-point hike from the Bank of England.
A global rally sparked by softer-than-forecast US consumer price index data came to an abrupt halt on Wednesday after the Fed sought to dispel hopes for a rate cut next year. Powell reaffirmed the central bank won’t back away from its fight against inflation despite mounting fears of job losses and a recession.
“Markets have been in a tug-of-war between better-than-feared economic data juxtaposed with concerns about the potential for the Fed to over-tighten monetary policy and push the economy into a recession,” said Art Hogan, chief market strategist at B. Riley Wealth. “We know that inflation is rolling over and is likely to continue.”
Investors are also parsing a bevy of US economic data Thursday. While retail sales were worse than expected, initial jobless claims came in lower than expected, underscoring the strength in the labor market.
“The consumer has been resilient amid hot inflation and rising rates, but high prices and talks of a recession may have some now second guessing reaching for their wallet,” said Mike Loewengart, head of model portfolio construction for Morgan Stanley’s global investment office. “It’s been a busy week for investors with both the Fed and ECB raising rates, so it shouldn’t be a surprise to see a shaky market.”
Key events this week:
- Eurozone S&P Global PMI, CPI, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 fell 1.5% as of 9:34 a.m. New York time
- The Nasdaq 100 fell 1.8%
- The Dow Jones Industrial Average fell 1.2%
- The Stoxx Europe 600 fell 2.5%
- The MSCI World index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.4%
- The euro rose 0.3% to $1.0710
- The British pound fell 0.9% to $1.2313
- The Japanese yen fell 0.8% to 136.52 per dollar
Cryptocurrencies
- Bitcoin fell 1.8% to $17,510.51
- Ether fell 2.8% to $1,274.61
Bonds
- The yield on 10-year Treasuries declined three basis points to 3.45%
- Germany’s 10-year yield advanced 13 basis points to 2.07%
- Britain’s 10-year yield declined seven basis points to 3.24%
Commodities
- West Texas Intermediate crude fell 0.3% to $77.04 a barrel
- Gold futures fell 1.4% to $1,793.20 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
