Traders work at the New York Stock Exchange (NYSE) in Manhattan, New York, USA on the 18th. New York stocks tumbled on Tuesday as fears of inflationary pressures revived as retail earnings deteriorated. New York = Reuters
U.S. stocks plunged on the 18th (local time) amid fears of deepening inflation.
On the same day, the Dow Jones Industrial Average of the New York Stock Exchange closed at 31,490.07, down 1164.52 points (3.57%) from the previous day. The Standard & Poor’s (S&P) 500 index fell 165.17 points (4.04%) to 3923.68, and the Nasdaq index, centered on technology stocks, closed at 11,418.15, down 566.37 points (4.73%), respectively. The decline in the S&P 500 was the biggest since June 2020, during the early days of the COVID-19 pandemic.
Walmart and Target, the largest US retailers, presented sluggish earnings and earnings forecasts on the grounds of inflation, which acted as a negative factor. Wal-Mart plunged 11.4% the day before, the largest since October 1987, and fell an additional 6.8% on the same day. Target plummeted 24.9% in one day. Other retail stocks, such as Amazon (-7.2%), Best Buy (-10.5%) and Macy’s (-10.7%), also fell at the same time.
Consumers are more likely to cut spending amid rising inflation, and concerns have spread in the market that the US Federal Reserve (Fed) rate hike to curb inflation could trigger a global recession. Federal Reserve Chairman Jerome Powell attended an event hosted by the Wall Street Journal the day before and expressed strong will to tighten austerity, saying, “I will not hesitate to raise interest rates above the neutral rate.” The prolonged war in Ukraine and China’s quarantine measures are also pointed out as factors that increase the possibility of inflation worsening.
Recently, some analysts have suggested that the stock market is similar to when the dot-com bubble burst in 2000. Investor Jeremy Grantham, famous for predicting the financial market bubble in the past, appeared on CNBC, an American economic media, on the same day and said, “This bubble is similar to the 2000 bubble in that it concentrated on US tech stocks.” “Unlike last year, the price of all assets, including real estate, bonds, energy, and metals, is inflated now, making it a more serious situation,” he explained. It also raised the possibility that the S&P 500 might plunge at least 40% from its previous high, pushing it to the 2880 level.
Jang Soo-hyun reporter jangsue@hankookilbo.com
