U.S. stocks, which rose sharply on Wednesday, began to fall sharply on Thursday as the stock market opened. The share prices of large technology companies in particular are falling.
Listed shares prices have been falling sharply in the U.S. on Thursday. Shortly before 9 pm Finnish time, the technology-focused Nasdaq index was down 4.9 percent, the broad S&P 500 was down 3.6 percent, and the Dow Jones of large companies was down 3.20 percent.
According to the news agency Reuters, the Nasdaq was on its way to its worst day since June 2020 from 8 pm Finnish time. According to the news agency Bloomberg the same can be said for the S&P 500, which, however, rose the most in one day to about two years on Wednesday.
Of the technology-focused, Nasdaq has been pulled down by stock prices by major technology companies in particular, which have been falling sharply on Thursday.
Before 9 p.m.
Yet on Wednesday, the market reacted positively to the US Federal Reserve’s announcement of an exceptional one-time rate hike of 0.50 percentage points.
With the stock market closing on Wednesday, the S&P 500 was up 3 percent, the Nasdaq up 3.2 percent and the Dow Jones up 2.8 percent.
The central bank has raised the key interest rate by 0.50 percentage points at a time more than 20 years ago.
Read more: The US Federal Reserve made an exceptional decision: to raise interest rates by up to 0.50 percentage points – shares rose sharply
The key interest rate may be raised again by 0.50 percentage points at once, perhaps twice. Governor of the Central Bank Jerome Powell however, said quite bluntly that one-off increases of 0.75 percentage points are not planned in this outlook.
On Wednesday it was enough for investors and led to a significant rise in the price of shares.
On Thursday, however, market sentiment seemed to have changed.
“It will be really difficult for the Fed to normalize interest rates without negatively impacting growth and earnings. Share prices are too high if we see a stabilization or decline in earnings per share, ”said the portfolio manager Paul Nolte About Kingsview Investment Management To Bloomberg News.
CEO of Longbow Asset Management, Oklahoma Jake Dollarhide again told Reuters that more and more people are questioning the central bank’s ability to fight inflation without “destroying” the country’s economy.
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As late as Wednesday, the market reacted positively to the Fed’s announcement of an exceptional rate hike.
In Europe stock prices rose for a long time on Thursday, following the rise in US equities on wednesday.
However, the opening of the US market to a clear decline also seemed to be driven by European stock prices, as the European STOXX 600 index, for example, fell 0.7% when stock markets closed.
Nordean chief analyst Jan von Gerich reminded In an interview with HS on Thursday that the central bank’s interest rate decision may not have changed the big picture of the market despite the positive stock market reactions since the announcement.
“The inflation picture didn’t change at all. The Fed needs to tighten financial conditions to bring inflation down, ”von Gerich said.
In an interview conducted before the stock market opened in the United States, Von Gerich estimates that stock price volatility will continue despite the interest rate decision.
According to him, the upward fluctuation following the announcement by the central bank does not mean that the uncertain environment in the market that has continued for several months has changed significantly.
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