Fed raises interest rate concerns, U.S. stocks fell across the board on Friday
On March 4, local time, as Fed Chairman Powell hinted that inflation might temporarily appear in an interview, causing investors to worry about the Fed’s interest rate hike, the three major U.S. stock indexes fell across the board during the sell-off. Among them, the Nasdaq index will turn around in 2021. For the downward trend.
The Dow Jones Industrial Average fell 346.95 points, or 1.11%, to close at 30,924.14, the S&P 500 fell 51.25 points, or 1.34%, to close at 3,768.47 points, and the Nasdaq index fell 274.28 points, or 2.11%, to close at 12,723.47. point.
The three major stock indexes all fell in shocks that day, and the Nasdaq fell more than 700 points at one point.
Due to the day’s sell-off, Nasdaq has now entered a consolidation and has fallen by more than 10% from its highest point in the last year.
In an interview with The Wall Street Journal that day, Fed Chairman Powell stated that the reopening of the economy may “create a certain upward pressure on prices” (i.e. inflation), but he reiterated that the Fed will remain “patient” before changing its policy. Even if there is temporary inflation.
Powell admitted that the rapid rise in interest rates on U.S. Treasury bonds has recently attracted his attention.
But he said that before considering any action, the Fed needs to see a larger increase in the entire interest rate range.
After Powell’s speech, the yield on the 10-year U.S. Treasury note, which has made investors nervous in recent weeks, jumped to 1.54%.
Last week, the benchmark 10-year Treasury bond suddenly soared to a high of 1.6%, triggering a massive sell-off in the stock market.
Before Powell triggered another round of gains, yields generally fell this week.
Some investors may be disappointed that Powell has not strongly hinted that the Fed will change its asset purchase plan to curb the recent rapid rise in interest rates.
It is increasingly expected that the Fed may implement a "reverse operation" as it did in the past, selling short-term bills and buying long-term bonds.
Powell said that in a few quarters or longer, inflation exceeding the Fed's 2% limit will not cause substantial changes in consumer long-term inflation expectations.
After Powell’s comments, gold prices fell by more than 1%, hitting a nearly nine-month low.
Rising bond yields may weaken the attractiveness of gold as an inflation hedge.
In terms of economic data, the number of people applying for unemployment benefits for the first time each week in the United States is better than expected, but it has little effect on investors.
The US Department of Labor reported on Thursday that in the week ending February 27, the number of people applying for unemployment insurance for the first time totaled 745,000, slightly lower than the previous estimate of 750,000.
Wall Street analysts believe that “good news for the economy, but bad news for the market. As interest rates rise due to the expected better economic growth, it will hurt the stock market.”
Some people believe that additional stimulus measures may inject optimism into the market.
The Senate is currently debating the $1.9 trillion rescue package passed by the House of Representatives on Saturday.
(CCTV reporter Xu Dezhi)