Tech stocks lead indexes lower on Wall Street; eyes on the Fed | national news

April 6, 2022

Montana Economy

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Stocks fell Wednesday morning on Wall Street and bond yields rose as investors try to gauge how quickly the Federal Reserve will withdraw support for the economy and shift to fighting inflation.

The S&P 500 fell 1.2% at 10:20 a.m. EST. The Dow Jones Industrial Average fell 247 points, or 0.7%, to 34,387 and the Nasdaq fell 2.3%.

Tech companies are taking some of the biggest losses, which has weighed heavily on the broader market. Apple fell 2% and Microsoft 2.7%.

Communications companies, retailers and others that rely on direct consumer spending also fell. Amazon fell 3.1% and Facebook parent company Meta fell 3.3%.

Bond yields rose sharply again. The 10-year Treasury yield jumped to 2.61% from 2.54%.

The latest action in stock and bond markets was sparked by comments from a Federal Reserve governor on Tuesday that fueled expectations of a more aggressive approach by the central bank to help bring soaring inflation under control. The Fed has already started to raise its benchmark interest rate and is expected to continue its hikes throughout the year.

Investors will be watching closely the minutes released later today from the Fed’s latest policy meeting for more clues on its next steps. Traders are pricing in a nearly 77% chance that the Fed will raise its key interest rate by half a percentage point at its next meeting in May. That’s double the usual amount and something the Fed hasn’t done since 2000.

Inflation is at its highest level in four decades and threatens to dampen economic growth. Rising prices for everything from food to clothes have raised fears that consumers may end up cutting back on spending. Russia’s invasion of Ukraine has added to these concerns which are pushing energy and commodity prices, including wheat, even higher.

Crude oil prices were relatively flat on Wednesday, but are up about 35% for the year. This pushed gasoline prices higher, putting more stress on shipping costs, commodity prices and consumer wallets.

The conflict in Ukraine continued to cause financial pressures against Russia. The White House has said Western governments will ban further investment in Russia following evidence that its soldiers deliberately killed civilians in Ukraine. The US Treasury has said President Vladimir Putin’s government will be prevented from paying the dollar debts of US financial institutions, potentially increasing the risk of default.

European governments have resisted calls to boycott Russian gas, Putin’s main export source, because of the possible impact on their economies.

It’s been a pretty quiet day for corporate news so far, ahead of the latest round of corporate earnings. JetBlue Airways fell 7.3% after it offered to buy rival airline Spirit for $3.6 billion and scrap a plan to merge Spirit with Frontier Airlines. The spirit fell 3.1%.

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