US stocks in multi-week loss, Nasdaq down most since financial crisis

ANI
22 Jan 2022, 06:57 GMT+10

New York [US], January 22 (ANI/Sputnik): US stocks were headed for their worst month since the 2008 financial crisis as Wall Street is beset by a multi-week loss triggered by worries of a streak of interest rate hikes to clamp down on inflation.

The tech-laced Nasdaq index, the darling of investors after the coronavirus outbreak confined Americans to their homes and rely on video streaming and gadgets for work, is down 11% for so far January. That is more than the 10% loss it took in March 2020 at the onset of the COVID-19 pandemic and the most since October 2008 when the financial crisis broke.

The SP 500 index, representing the top 500 US stocks, is down 8% for January versus its previous biggest monthly loss of almost 13% in March 2020.

The Dow Jones Industrial Average, which represents stocks across US industry, is down 6% for January, its most since the 14% drop in March 2020.

"Wall Street has gone from debating how aggressive one should rotate out of tech into cyclicals, to sell it all," Ed Moya, analyst at online trading platform OANDA, said. "Investors have two big worries: it seems every day traders are reminded inflationary pressures are not going away anytime soon and could prompt the Fed into becoming overly aggressive in tightening monetary policy."Moya said the other concern of investors is that profit growth expectations may have been too optimistic and underpriced in the ballooning labor costs. Geopolitical risks are also adding fuel to the selling pressure, he added.

The Federal Reserve slashed US interest rates to almost zero after the outbreak of the COVID-19 crisis, and has kept them there since to aid recovery.

As a result, the US Consumer Price Index grew by 7% in the year to December, expanding at its fastest rate since 1982, after trillions of dollars of relief spending by the government, higher wage payouts by companies and supply chain disruptions caused by the pandemic. The Federal Reserve now says it may have to execute a series of interest rate hikes to counter such inflation. (ANI/Sputnik)