Interest Rate Angst Drags Down US Stocks

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2022-01-19 HKT 05:31

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  • Losses on Wall Street indices come as the market grapples with lofty Covid-19 infections in the United States and elsewhere. File photo: AP

    Losses on Wall Street indices come as the market grapples with lofty Covid-19 infections in the United States and elsewhere. File photo: AP

Wall Street stocks endured an ugly session on Tuesday, tumbling in their first session back after a holiday weekend on mounting worries about higher lending rates.

The yield on the 10-year US Treasury note, a proxy for the outlook on interest rates, shot above 1.85 percent as market watchers speculate the Federal Reserve could lift rates in March by twice as much as previously thought.

"The Fed's back is against the wall and the market is worried," said Adam Sarhan of 50 Park Investment.

"The Fed has to raise rates, but they have to keep inflation low, and what are they going to do if inflation stays high?"

The Dow Jones Industrial Average finished down 1.5 percent at 35,368.

The broad-based S&P 500 shed 1.8 percent to 4,577, while the tech-rich Nasdaq Composite Index sank 2.6 percent to 14,507.

Tuesday's losses also come as the market grapples with lofty Covid-19 infections in the United States and elsewhere, as well as a stream of mostly lacklustre earnings from large banks.

Goldman Sachs became the latest financial giant to be punished by investors, sinking 7.0 percent despite reporting record annual profits as fourth-quarter earnings were dented by higher costs on employee salaries amid a tight labour market.

Activision Blizzard surged 25.9 percent after Microsoft announced a US$69 billion deal to purchase the US gaming giant. Microsoft fell 2.4 percent. (AFP)

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