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Stocks sink as investors await Fed rate hike – Amrita Bazar

Stocks sink as investors await Fed rate hike – Amrita Bazar
Stocks sink as investors await Fed rate hike – Amrita Bazar

The Dow was down more than 450 points, or 1.5%, in midday trading. The S&P 500 also fell about 1.5%, while the tech-heavy Nasdaq fell 1.3%.

Aside from a mixed new housing report, there wasn’t much economic data for investors to focus on. August housing starts rose more than 12% from July, but building permits fell 10%.

The housing numbers are unlikely to change the minds of Fed policymakers, who will announce another rate hike on Wednesday. Markets are pricing in about an 85% chance of a third consecutive quarter of interest rate hikes.

But those who believe the Fed will be more aggressive and raise rates by an unprecedented full percentage point, or 100 basis points, are largely due to persistent inflationary pressures.

“The CPI report introduces a level of uncertainty about how the Fed will behave,” said Garrett DeSimone, head of quantitative research at OptionMetrics. DeSimone said he thinks the Fed should raise rates by 100 basis points, which would “break the Band-Aid hike.”

Expectations of higher interest rates also push long-term bond yields higher. The 10-year US Treasury yield reached 3.6% at one point on Tuesday before retreating. This is the highest level since February 2011.

Tuesday’s market sell-off followed a decent rally to start the week. Stocks rallied late Monday after hovering near breakeven levels for most of the day.

But the market had a tough few days last week, falling after a shock earnings warning. fedex (FDX)This has raised further concerns about the global economy and the health of corporate America.

“We’re still seeing FedEx bearish in the market,” said Anthony Denyer, CEO of online brokerage firm Webull. “Transportation stocks are the canary in the coal mine when it comes to economics.”

Investors are getting nervous. The CNN Business Fear and Grade Index, which looks at seven market sentiment indicators, slipped further into fear territory.

The article is in Bengali

Tags: Stocks sink investors await Fed rate hike Amrita Bazar

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