Wall Street falls for 3rd straight session amid Fed rate hike worries
US stocks closed lower for a third straight session on Tuesday (August 30) amidst fears that a rise in job openings could provide another reason to the US Federal Reserve to maintain its aggressive path of interest rate hikes to combat inflation.
The benchmark S&P has gone down by more than 5% since Fed Chair Jerome Powell on Friday (August 26) reaffirmed the bank’s plans to raise interest rates.
US job openings rose to 11.239 million in July. Consumer confidence rebounded strongly after three straight monthly declines.
Also read: Stocks swing as Fed chair Powell signals more rate hikes
The Dow Jones Industrial Average fell 308.12 points, a fall by 0.96% to reach 31,790.87 while the S&P 500 lost 44.45 points, a fall by 1.10% to reach 3,986.16. The Nasdaq Composite dropped 134.53 points to reach 11,883.14.
According to the New York Fed President John Williams, the central bank will have to get a 3.5% policy rate, refrain from cutting interest rates at all next year for it to fight inflation.
All S&P sectors were in the negative territory. The energy sector was the highest percentage decliner, down by 3.36%. This comes as oil prices settled down by more than five percent amidst concerns of a sap demand due to the slowing of global economies.
Also read: Global stocks lose $20 trillion since Jan; plunging Re makes outlook bleak for India
For the FED’s September meeting, traders are pricing in a 74.5% chance of a third straight 75-basis point rate hike
Asian stocks
Asian stocks followed Wall Street lower on Wednesday (August 31) after strong US jobs data fueled expectations of further interest rate hikes. Oil prices rose nearly $1 per barrel.
US government data on Tuesday showed there were two jobs for every unemployed person in July. The report supported the argument that the economy can tolerate more rate hikes to tame inflation that is running at a multi-decade high.
Also read: Sensex, Nifty rebound over 2.5pc on strong gains in banking, IT stocks
The Shanghai Composite Index fell 0.9% to 3,197.15 after a monthly index of manufacturing showed activity contracted again in August. The Nikkei 225 in Tokyo shed 0.6% to 28,039.91 and the Hang Seng in Hong Kong tumbled 1.1% to 19,731.49.
The Kospi in South Korea was unchanged at 2,451.14 while Sydney’s S and P-ASX 200 shed 0.2% to 6,987.00. New Zealand advanced while Singapore and Indonesia declined.
Investors worry rate hikes by the Fed and other central banks in Europe and Asia to extinguish an inflation surge might derail global economic growth.
(With inputs from agencies)
