(MENAFN- Khaleej Times) Pain for markets was worldwide as investors braced for more aggressive moves from a coterie of central banks File By AP
Published: Tue 14 Jun 2022, 12:10 AM
Fears about a possible recession are pounding markets on Monday, and Wall Street's S&P 500 tumbled into the maw of what's known as a bear market after sinking more than 20 per cent below its record set early this year.
The S&P 500 dropped 2.7 per cent in the first chance for investors to trade after getting the weekend to reflect on the stunning news that inflation is getting worse, not better. The Dow Jones Industrial Average was down 591 points, or 1.9 per cent, at 30,792 as of 1.58 pm. Eastern time, and the Nasdaq composite was 3.4 per cent lower.
The center of Wall Street's focus was again on the Federal Reserve, which is scrambling to get inflation under control. Its main method is to raise interest rates in order to slow the economy, a blunt tool that risks a recession if used too aggressively.
With the Fed seemingly pinned into having to get more aggressive, prices tumbled for everything from bonds to bitcoin, from New York to New Zealand, with the sharpest drops hitting the biggest winners of the earlier low-rate era.
Some economists are even speculating the Fed on Wednesday may raise its key short-term interest rate by three-quarters of a percentage point.
The pain for markets was worldwide as investors braced for more aggressive moves from a coterie of central banks.
In Asia, indexes fell at least 3% in Seoul, Tokyo and Hong Kong. Stocks there were also hurt by worries about Covid-19 infections in China, which could push authorities to resume tough, business-slowing restrictions.
In Europe, Germany's DAX lost 2.4%, and the French CAC 40 fell 2.7%.
Some of the biggest hits came for cryptocurrencies, which soared early in the pandemic when record-low interest rates encouraged some investors to pile into the riskiest investments. Bitcoin tumbled more than 17% from a day earlier and dropped to $23,222, according to Coindesk. It's back to where it was in late 2020 and down from a peak of $68,990 late last year.
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