Zhongxin Finance, May 19 (Reporter Xie Yiguan) The "thunder" planted by the Federal Reserve's "helicopter money" in the early stage has now been detonated.

On May 18 (Wednesday) local time, U.S. stocks were once again "bloodbathed", and the three major stock indexes collectively "slid down the slide".

U.S. stocks fell sharply, Dow fell more than 1,000 points, the biggest drop in more than a year

  On Wednesday, U.S. stocks opened lower and moved lower. As of the close, the Dow plunged 1,164.52 points, or 3.57% to 31,490.07 points, the biggest drop since October 2020; the Nasdaq fell 4.73% to 11,418.15 points; the S&P 500 fell 4.04% At 3923.68 points, the biggest drop since June 2020.

The three major U.S. stock indexes closed at the close.

  Many large technology stocks that have fallen into the "bear market" fell again across the board. Amazon fell 7.16%, Tesla fell 6.8%, Apple fell 5.64%, Meta fell 5.12%, Microsoft fell 4.55%, Google A fell 3.93%, six Big tech stocks lost a total of $453.1 billion in market value on Wednesday, or about 3.06 trillion yuan.

  Walmart and Target released bad financial reports one after another, and U.S. retail stocks also suffered heavy losses.

Target plunged 24.93% and Kohl's fell 11.02%.

Best Buy fell 10.51%, Macy's fell 10.66%, and Walmart fell 6.79%.

  With the spread of market panic, the demand for safe-haven increased greatly.

On the 18th, the benchmark 10-year U.S. Treasury yield once exceeded 3%, and then turned down.

On the U.S. dollar index, the U.S. dollar index, which measures the greenback against six major currencies, rose 0.43 percent to 103.8100 as of late New York trading.

High inflation, market fears of U.S. recession

  Market analysis believes that the recent adjustment in U.S. stocks may stem from concerns about inflation and the economic outlook.

  Recently, the United States announced April CPI data, which increased by 8.3% year-on-year, a slowdown from 8.5% in March, but still higher than the expected value of 8.1%.

Data map: A customer passes by an egg container in a supermarket in San Mateo County, California.

Photo by China News Agency reporter Liu Guanguan

  Considering that falling stock prices, rising mortgage rates and a stronger dollar relative to trading partners will weigh on the economic outlook, JPMorgan recently lowered its forecast for the U.S. economy this year and next, lowering its forecast for U.S. real GDP growth in the second half of the year from 3%. It is lowered to 2.4%, the real GDP growth forecast in the first half of 2023 is lowered from 2.1% to 1.5%, and the real GDP growth forecast in the second half of 2023 is lowered from 1.4% to 1%.

  Goldman Sachs CEO David Solomon said on Wednesday that the bank's clients are bracing for slower economic growth and falling asset prices, all as "extremely punitive" inflation weighs on the economy.

"There is a possibility of a recession." Solomon stressed that he was not overly concerned about this risk, but cited estimates from Goldman Sachs chief economist Jan Hatzius and others that the risk of a recession in the next 12 to 24 months At least 30%.

  Under the pressure of inflation and recession expectations, talk of further tightening of U.S. monetary policy has resurfaced.

  Federal Reserve Chairman Jerome Powell said on Tuesday that the central bank is moving quickly to contain inflation at 40-year highs.

Powell said the Federal Open Market Committee (FOMC) broadly supports raising rates by 50 basis points each at the next two meetings.

He stressed that the Fed will not hesitate to continue raising interest rates until inflation falls.

  Chicago Federal Reserve Bank President Charles Evans said on the same day that the Fed needs to actively raise interest rates to bring inflation back under control.

Evans favored moving the federal funds rate forward into neutral territory.

  However, Mohamed El-Erian, chairman of the fund management company Gramercy Fund Management, said that although the United States may be able to avoid a recession, stagflation is inevitable.

"We've seen growth slow and we're going to see inflation stay high."

  El-Erian blamed the situation in part on the Fed's view in 2021 that inflation will subside at some point.

"The Fed is now finally starting to catch up with reality."

Data map: NYSE.


U.S. stock market is expected to continue to adjust in the future


  As for financial markets, in El-Erian's view, investors are still pricing in a "significant slowdown in growth," which means the market will continue to adjust.

  CITIC Securities also holds a similar view, "The tightening of the Fed and investors' concerns about a U.S. economic recession will impact U.S. stocks, and U.S. stocks will still face adjustment risks in the future."

  In the view of CITIC Securities, due to the limited ease of supply side, the Fed's tightening has a certain lag in suppressing demand, and it is expected that U.S. inflation will remain relatively sticky.

Although U.S. bond interest rates have fallen recently, there is still room for an upward trend in U.S. bond interest rates in the future.

Due to the divergence of economic fundamentals in other major economies and monetary policies from those of the United States, the dollar has shown an upward trend since 2021, and the dollar is expected to strengthen further.