Dow Jones loses 2.8 percent: fear of interest rates still controls the stock market

Dow Jones loses 2.8 percent
Fear of interest rates continues to dominate the stock market

In addition to the US Federal Reserve’s announcement that it will soon raise interest rates by half a percentage point, the fallout from the Shanghai lockdown is also dampening sentiment on Wall Street. A possible decrease in Chinese demand is reflected in the prices of raw materials.

The prospect of significant interest rate hikes by the US Federal Reserve is causing investors to withdraw from Wall Street. Disappointing trading numbers from some companies are also weighing on the stock market. Of the dow jones it lost 2.8 percent to 33,811 points. the high tech nasdaq fell 2.6 percent to 12,839 points and the broad S&P 500 it lost 2.8 percent to 4,272 points. For the week, the Dow fell 1.85 percent, the S&P 2.75 percent and the Nasdaq 3.8 percent.

Nasdaq Composite
Nasdaq Composite 12,839.29

The most recent statements by US Federal Reserve Chairman Jerome Powell, who had signaled a half percentage point increase for May, had a particularly strong impact on sentiment. “The market is concerned that the Fed is raising inflation fears too high and could cause corporate profits to collapse in the future,” said Peter Cardillo, chief economist at investment firm Spartan.

In late trading, Cleveland Fed central banker Loretta Mester spoke out against a 75 basis point hike, which would “shock” markets. But she also announced her support for a 50 basis point rate hike.

Lockdowns cloud economic outlook

In addition to the war in Ukraine, stockbrokers were concerned about the pandemic restrictions in China. “Originally it was intended to be just a short close for Shanghai,” said Bank ING analyst Wenyu Yao. “Now more than a month has passed and no one knows when it will end.” A possible drop in Chinese demand was reflected in the prices of raw materials. The American Crude Oil Variety STIs it fell 2.5 percent to $101.18 a barrel (159 liters). For the latter, however, this is only a short-term setback, said analyst Stephen Brennock at brokerage PVM Oil Associates. “An EU boycott of Russian energy supplies will inevitably lead to higher prices.”

gap
gap 10.72

One of the biggest losers in the US stock market. gap with a price less than almost 18 percent. Due to the weakening economy and problems with the Old Navy brand, the fashion company expects sales to drop as much as 15 percent in the first quarter. Until now, a negative sign had been announced in the high single-digit percentage range. However, he sees the current price losses as a buying opportunity, writes analyst David Swartz at research house Morningstar. Gap is far from getting into serious financial difficulties. In the wake of the Gap, shares of Abercrombie & Fitch, American Eagle, Urban Outfitters and “Calvin Klein” parent PVH all fell a good 9 percent.

in Verizon a cautious outlook overshadowed surprisingly low customer churn. The mobile operator expects earnings at the lower end of the target range of $5.40 to $5.55 per share for 2022. Sales will likely grow nine rather than ten percent. Verizon operates in a highly competitive market, analysts at research house Zacks wrote. In addition to marketing expenses and customer acquisition discounts, mobile RF costs are a risk factor for profitability. Verizon shares fell 5.6 percent.

the papers of Kimberly-Clark recorded an increase of 8.1 percent. Thanks to strong demand, paper towel supplier “Kleenex” is targeting a two to four percent sales increase by 2022 instead of one to two percent. Analysts feared a forecast cut because consumers could switch to cheaper no-name products.

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