Stocks tumble after Fed chief’s comments signaling tougher action on inflation

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U.S. stocks faltered on Tuesday, driven by losses in technology, as investors weighed in on Fed Chairman Lael Brainard’s statements that policymakers are ready to act more aggressively to curb inflation. Investors also watched reports that the US and European Union are expected to announce more sanctions against Russia on Wednesday.

[Click here to read what’s moving markets heading into Wednesday, April 6]

The S&P 500 fell 1.3% and the Dow Jones Industrial Average lost 280 points after climbing for two consecutive trading sessions. The Nasdaq Composite Index fell 2.3% to record its biggest drop in three weeks and erase gains from a tech rally that helped the index explode on Monday. Meanwhile, the 10-year US Treasury yield rose to 2.56%, its highest level since May 2019.

Awaiting a vote of approval for the central bank’s number two role, Brainard said at a conference on Tuesday that the Fed could raise interest rates more aggressively to curb the high inflation felt by Americans, and that officials would likely start shrinking assets (long-term interest rates) in about a month. A move that could have the effect of further raising rates).

“Right now inflation is very high and open to upside risks,” Brainard said. If the inflation and inflation expectations indicators show that such a measure should be taken, the Board is ready to take stronger steps.”

Investors continued to watch the war in Eastern Europe and weighed in on reports that the EU is expected to impose a new round of sanctions against Russia. Ukrainian President Volodymyr Zelenskyy, in his speech at the United Nations Security Council on Tuesday, accused Russian troops of committing “the most horrific war crimes” since World War II.

The United States and its Western allies are expected to announce more sanctions on Russia on Wednesday. Reuters reportedciting a source familiar with the subject.

“Tomorrow, the United States, in coordination with the G7 and the EU, will announce an additional comprehensive package of sanctions measures that will inflict significant costs on Russia and push Russia on the path of economic, financial and technological isolation,” the source said. Reuters.

On the economic front, Deutsche Bank has become the first major bank to predict a recession next year if the Federal Reserve suffers drastic breaks in the economy.

“We don’t see the Fed making a soft landing any more,” Deutsche Bank economists said in a note. “Instead, we expect a more aggressive monetary tightening to push the economy into recession.”

The warning came as investors closely watched part of the Treasury yield curve, which inverted last week. A yield curve inverted prior to each of the last eight slowdowns going back to 1969.

Nomura Chief US economist Robert Dent told Yahoo Finance Live on Monday that he sees the potential for a “mild recession” ahead.

“We think the cumulative risk of recession between today and the end of 2024 is about 35% to 40%. Most of this comes from what we think would be a very aggressive response from the Fed to contain inflation and really cool the labor market.”

Twitter (TWTR) rallied again on Tuesday despite broad-based losses in technology, a day after the electric vehicle executive announced that it had purchased a 9.2% stake in the company after the company said it would appoint Tesla (TSLA) CEO Elon Musk to its board of directors. social media company.

“He’s talking for his money, saying Twitter is an undervalued platform,” Rohit Kulkarni of MKM Partners told Yahoo Finance Live on Monday. “He sees that there are things they can do to improve the service, and it certainly hints at a more active role.”

Wedbush Securities analyst and Tesla bull Dan Ives told Yahoo Finance that he predicts Musk will have an active stake in the social media platform in the coming weeks or months, with his latest stakes being “just appetizers.”

4 pm ET Monday: All three benchmarks close lower after hawkish Brainard comments

Stocks closed the trading session on Tuesday as follows:

  • S&P500 (^GSPC): -57.31 (-1.25) to 4,525.33

  • Dow (^DJI): -279.52 (-0.80%) – 34,642.36

  • Nasdaq (^IXIC): -328.39 (-2.26) to 14,204.17

  • raw (CL=F): -3.13$ (-3.03%) to 100.15$/barrel

  • gold (GK=F): -8.30$ (-0.43%) to 1,925.70$ per ounce

  • 10 years Treasure (^TNX): +14.4 bps for 2.5560% efficiency

12:27 pm ET: Chipmakers post biggest drop in nearly a month as tech stocks plummet

Shares of semiconductor companies fell in intraday trading, weighing on the broad-based decline in tech stocks.

The Philadelphia Stock Exchange Semiconductor Index fell as much as 4.1% to record the biggest intraday percentage drop in nearly a month.

Notable lags in the industry are Nvidia (NVDA), which fell 4.2% to $262.07 per share; Lam Research (LCRX) fell 5.5% to $505.92 per share; and Marvell Technology (MRVL) were down 6.3% to $68.30 as of 12:27 PM ET.

12:19 pm ET: Stocks drop after two days of gains

As of 12:18 pm ET, the main movements in the markets were:

  • S&P500 (^GSPC): -32.28 (-0.70) to 4,550.36

  • Dow (^DJI): -86.23 (-0.25%) to 34,835.65

  • Nasdaq (^IXIC): -261.54 (-1.80%) to 14.271.01

  • raw (CL=F): -0.43$ (-0.42%) to 102.85$ per barrel

  • gold (GK=F): -10.30$ (-0.53%) to 1,923.70$ per ounce

  • 10 years Treasure (^TNX): +14.6 bps for +2.5580% efficiency

10:43 pm ET: US service sector activity picks up in March but higher costs remain

Activity in the US service sector gained momentum last month, supported by the further rollback of COVID restrictions, but businesses continued to face higher costs as supply chain restrictions weighed on prices.

The Institute for Supply Management (ISM) reported that the non-manufacturing activity index rose to 58.3 last month from 56.5, a one-year low in February.

This increase capped the three-month consecutive decline in the index and underlined the shift in spending back from goods to services.

Economists polled by Bloomberg had forecast the non-manufacturing index to rise to 58.5. Readings above 50 point to expansion in the services sector, which accounts for more than two-thirds of US economic activity.

10:33 PM ET: Fed government Brainard says central bank is ready for “stronger action” on inflation

Federal Reserve Chairman Lael Brainard said the central bank could raise interest rates more aggressively to reduce the high inflation felt by Americans.

He added that policymakers are adjusting to the differential effects of rising prices, especially on low-income households.

“Currently, inflation is very high and exposed to upside risks,” Brainard said at a conference on Tuesday. If the inflation and inflation expectations indicators show that such a measure should be taken, the Board is ready to take stronger steps.”

Inflation data released last week showed US prices rose 6.4% year-on-year in February, the fastest since 1982.

Federal Reserve Board Chairman Lael Brainard testified before a Senate Banking Committee on his nomination for the vice chairmanship of the Federal Reserve on January 13, 2022, on Capitol Hill in Washington, DC.  REUTERS/Elizabeth Frantz

Federal Reserve Board Chairman Lael Brainard testified before a Senate Banking Committee on his nomination for the vice chairmanship of the Federal Reserve on January 13, 2022, on Capitol Hill in Washington, DC. REUTERS/Elizabeth Frantz

10:23 PM ET: Twitter to appoint Elon Musk to board after Tesla CEO announces 9.2% stake

Twitter Inc. (TWTR), a day after announcing a significant stake in the social media company, announced that the company will appoint Tesla CEO Elon Musk to its board of directors.

The move may temporarily prevent Musk from proposing a takeover bid; According to analysts and investors’ predictions, it could happen after the Tesla CEO announced that he had bought Twitter shares for about $3 billion.

According to one filing, Musk cannot own more than 14.9% of Twitter’s common stock as an individual shareholder or member of a group, as long as he is Twitter’s director.

09:30 ET: Stocks tumble as investors turn to more likely sanctions against Russia

The main movements in the markets at the opening on Tuesday were:

  • S&P500 (^GSPC): -12.78 (-0.28%) to 4,569.86

  • Dow (^DJI): Between -90.43 (-0.26%) and 34,831.45

  • Nasdaq (^IXIC): +271.05 (+1.90) to 14,532.55

  • raw (CL=F): +0.83$ (+0.80%) to 104.11$ per barrel

  • gold (GK=F): +$5.50 (+0.28%) to $1,939.50 per ounce

  • 10 years Treasure (^TNX): +4.6 bps for 2.4580% efficiency

07:50PM ET: US halts Russian bond payments aimed at increasing pressure on Moscow

In a bid to put pressure on Moscow, the United States stopped the Russian government on Monday from paying holders of sovereign debt more than $600m from reserves held in US banks.

Foreign currency reserves held by the Russian central bank in US financial institutions were frozen on February 24 as part of sanctions against Moscow for its invasion of Ukraine.

However, the US Treasury Department allowed the Russian government to use funds to make coupon payments on dollar-denominated government debt on a case-by-case basis.

On Monday, the US government moved to cut Moscow’s access to frozen funds as the principal payment of $552.4 million on a maturing bond is due.

7:10 a.m. ET: Stock futures down, oil up after Monday’s tech rally

The main moves in pre-open futures on Tuesday were:

  • S&P 500 futures (ES=F): -10.50 points (-0.23%) to 4,567.25

  • Dow futures (YM=F): Between -83.00 points (-0.24%) and 34,746.00

  • Nasdaq futures (NQ=F): Between -37.75 points (-0.25%) to 15,126.50

  • raw (CL=F): +1.28$ (+1.24) to 104.56$ per barrel

  • gold (GK=F): -1.70$ (-0.09%) to 1,932.30$ per ounce

  • 10 years Treasure (^TNX): 2.4120% with 0.00 bps efficiency

6:12 p.m. ET Monday: Futures change slightly after stocks close higher

Where the markets are traded ahead of Monday’s night session:

  • S&P 500 futures (ES=F): -2.25 points (-0.05%) to 4,575.75

  • Dow futures (YM=F): -14.00 points (-0.04%) – 34.815.00

  • Nasdaq futures (NQ=F): -9.25 points (-0.06%) to 15,155.00

  • raw (CL=F): +$0.43 (+0.42%) to $103.71 per barrel

  • gold (GK=F): Between +$3.30 (+0.01%) and $1,937.30 per ounce

  • 10 years Treasure (^TNX): +3.5 bps for 2.4120% efficiency

Screens show trading information for Twitter on the floor of the New York Stock Exchange (NYSE) on April 4, 2022, New York City, USA.  REUTERS/Brendan McDermidScreens show trading information for Twitter on the floor of the New York Stock Exchange (NYSE) on April 4, 2022, New York City, USA.  REUTERS/Brendan McDermid

Screens show trading information for Twitter on the floor of the New York Stock Exchange (NYSE) on April 4, 2022, New York City, USA. REUTERS/Brendan McDermid

Alexandra Semenova is a correspondent for Yahoo Finance. follow him on twitter @alexandraandnyc

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