The Dow Jones index lost 2.06% to 33,129.59 points, the technology-dominated Nasdaq dropped 2.50% to 11,492.30 points and the broader S&P 500 index, dropping below 4,000 points, returned 2.00% (3,997.34 points).

"Uncertainties surrounding future central bank (Fed) rate decisions continue to put pressure on the equity market as investors digest rapid inflation data and remarks from Fed officials," commented the analysts. Schwab analysts.

They summarized the news of the past week, with a sharply rising wholesale price index and multiple statements from Fed officials hammering that there is "still work to do" to tame inflation.

For Steve Sosnick of Interactive Brokers (IBKR), "the markets are realizing that they have been too fast" in their rebound since the beginning of the year which retrospectively appears "more like a technical rebound, more than based on fundamentals" .

The analyst noted how the bond market "reacted badly" to the idea "that the Fed is going to be more aggressive than we thought on rates".

Yields on 10-year Treasury bills climbed 14 basis points on Tuesday, to 3.95% at their highest in almost three and a half months.

"It's something the stock market can hardly ignore," commented Mr. Sosnick.

In the process, the dollar, a safe haven par excellence, took 0.36% on the euro around 9:25 p.m. GMT to 1.0645 dollars for one euro.

To these concerns about inflation and the Fed's response, were added doubts about the prospects of two "great barometers" of consumption, distributors Walmart and Home Depot.

Supermarket giant Walmart posted solid sales in the last quarter of its financial year (+7.3% over one year) but the group fears that "stubborn" inflation will slow down the consumer in 2023, according to its CEO Doug McMillon.

The group expects only 2% to 2.5% growth in sales this year, on a like-for-like basis.

Down much of the session, Walmart action ended up gleaning 0.61%.

Home Depot, the DIY leader, slumped 7.06%.

The chain has published a disappointing turnover for the whole of the year and even expects a decline in its profit this year.

The brand has to deal with persistent inflation but also with the fact that customers, very focused on DIY projects during the pandemic, now prefer to spend on experiences such as travel rather than on goods.

Many retail stocks followed suit, such as the home equipment chain Lowe's (-5.12%), Macy's department stores (-6.51%), Target supermarkets (-4.04% ) and even the semi-wholesale chain Costco (-1.13%).

The leader in online sales Amazon also closed in the red (-2.70%).

The selling trend has not spared the big names on the Nasdaq, which are very sensitive to the rise in short-term interest rates, which is hampering their investment capacity.

Alphabet (Google), Apple and Microsoft all lost more than 2%.

On the macro-economic front, the real estate market did not give much good news.

Home resales fell again for the twelfth month in a row, posting a further decline of 0.7% in January and disappointing analysts who were anticipating a rebound.

On Wednesday, investors will be watching the minutes (the "minutes") of the last Fed meeting for clues to the path of rates to come.

© 2023 AFP