Wall Street plummets as inflation fears spook investors Business

Anthony Saglimbene of Ameriprise Financial said: “It’s a very messy environment for investors right now. There’s overall negative sentiment in the market.”

Wedbush’s Daniel Ives said: “Risk sentiment is brutal for investors in this tech wreck. Wall Street sees blank selling as Powell and the Fed try to chase higher inflation.

“It’s been a horror show for the Nasdaq and tech stocks have been crushed by Fed fears. We view this as a tech investor capitulation and way overdone here.

Traders fear the Fed will struggle to fight persistently high inflation amid the lingering threat of a recession.

On Wednesday, the central bank raised rates from 0.5% to 1%, its biggest increase since 2000.

Stocks rallied after Wednesday’s announcement, with the S&P 500 closing 3% higher in the biggest one-day jump since May 2020.

The Fed’s latest decision was widely expected. Markets stabilized this week ahead of the policy update, but Wall Street feared the Fed might choose to raise rates by 0.75 percentage points in the coming months.

Mr Powell allayed those concerns, saying the central bank was “not actively considering” such an increase.

Thomas Mathews of Capital Economics said: “Investors had started to discount some chances of an even bigger upside. It perhaps makes sense that there was initially some sort of relief rally in the bond and equity markets.

“With further monetary tightening coming from the Fed, we believe the rise in Treasury yields has yet to continue and stocks will continue to struggle.”