On the 9th (local time), the three major indexes of the New York Stock Exchange plunged again. Amid continuing concerns over inflation (inflation), fears have grown that the US Federal Reserve’s aggressive tightening policy to catch inflation could lead to an economic slowdown.
On the New York Stock Exchange (NYSE), the Dow closed at 32,245.70, down 653.67 points (1.99%) from the previous day. The Nasdaq Composite, centered on technology stocks, fell 521.41p (4.29%) to 11,1623.25, and the S&P 500 fell 132.10p (3.20%) to 3991.24.
The S&P 500 fell below 4000 for the first time since March 31, 2021. It is down 17% from the peak in January. The Nasdaq fell 28% from its 52-week high, deepening the bear market.
Eleven sectors of the S&P 500 fell all at once, excluding consumer staples 0.05%. △Consumer discretionary -4.26% △Energy -8.3% △Financial -2.46% △Health care -2.57% △Industry -2.4% △Raw material -3.24% △Real estate -4.62% △Technology stock -3.94% △Communication service -2.44% △ Utilities -0.77% and so on.
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U.S. Treasury yields rose rapidly amid expectations that inflation would continue to exceed the 2% target and that the Fed would continue to tighten aggressive policy.
The yield on the 10-year U.S. Treasury note soared to 3.203% at one point during the day. It was the highest level since November 2018.
As the yield on the 10-year U.S. Treasury bond nearly doubled from 1.6% in early March to nearly double, the opinion that the economy could slow down due to a steep rise in interest rates is also gaining strength. When interest rates rise, tech stocks and growth stocks tend to underperform.
Shares of major tech stocks Apple, Microsoft and Meta fell more than 3% on the same day. Shares of electric vehicle maker Tesla and semiconductor stock Nvidia also fell more than 9%.
The Fed is expected to continue tightening policy, and fears of a global economic slowdown have raised concerns that stock prices will continue to decline.
David Costin, chief U.S. equity strategist at Goldman Sachs, predicted high volatility for the stock for the time being. “Even in the best case scenario, the stock price will only show limited returns,” he said, adding that it is difficult to expect a flashback in the market like the end of March, given the tight financial environment and poor liquidity.
The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), also called the ‘Wall Street fear index’, rose 15.1% to 34.75.
Stock markets in major European countries fell all at once. Amid growing concerns about an economic slowdown that emerged as China maintains its zero-corona policy and continues its lockdown measures, interest rates hikes in each country following the Fed’s aggressive tightening policies fueled investor anxiety.
The London Stock Exchange’s FTSE 100 index fell 171.36 points (2.32%) to 7216.58 from the previous day. Germany’s Frankfurt Stock Exchange’s DAX Index fell 293.62p (2.15%) to 13,380.67, and the Paris Stock Exchange’s CAC40 Index fell 172.34p (2.75%) to close at 6086.02. The pan-European Euro Stoxx50 index closed at 3526.86, down 102.31p (2.82%) from the previous day.
Oil prices plunge 6% on sluggish Chinese indicators and Aramco price cuts
International oil prices plummeted by 6%. This is because China released sluggish economic indicators amid continuing lockdown measures, raising concerns about an economic slowdown, and news came out that Saudi Arabia cut the official price of crude oil for delivery to Asia and Europe.
On the New York Mercantile Exchange (NYMEX) in the United States on the same day, the West Texas Intermediate (WTI) for June contract closed at $103.09 per barrel, down $6.68 (6.1%) per barrel from the previous day. As of 6:13 a.m., the July Brent price of Brent crude on the London ICE Futures Exchange is trading at $105.05 per barrel, down $7.34 (6.53%).
China’s sluggish economic indicators have raised concerns over a slowdown in demand.
China’s exports in April were $273.6 billion, up 3.9% year-on-year. It fell more than 10%p from the 14.7% recorded in March. It is analyzed that the impact of China’s measures such as lockdown of Shanghai while continuing its zero-corona policy amid the spread of the corona virus was a major factor.
As the coronavirus continues to spread, the lockdown zone in the Chinese capital, Beijing, is also expanding. The authorities identified 20 high-risk areas and 34 low-risk areas by identifying the movement of new infections and close contacts. This is an increase of two and six, respectively, from the previous day.
“China’s lockdown measures are having a negative impact on the oil market,” Andrew Lipou, CEO of Lipou Oil Associates, told Reuters.
News of Saudi Arabia cutting oil prices to Asian and European countries also weighed on oil prices.
State-owned Saudi Aramco cut prices for June for all varieties sold in Europe, Asia and the Mediterranean the day before. US prices remained the same.
It is analyzed that this is to prevent a decline in market share as the price of Russian crude oil plummets amid the sanctions imposed by Western countries.
