INSIGHTMOTORSPORTCONTACT
In our Market insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.
US stocks suffered their biggest decline in two months on Monday, with technology shares falling sharply as the bleak economic outlook looms.
Wall Street’s benchmark S&P 500 index slid by a sharp 2.1%, its most severe one-day fall since mid-June 2022.
There were declines across every sector, with technology related stocks and consumer groups including Amazon and Tesla amongst the worst impacted by the sharp decline.
The technology focused Nasdaq Composite index fell 2.5 per cent. Technology focused stocks that promise longer-term growth are seen as particularly vulnerable to rising interest rates because the higher rates reduce the relative value of earnings in the foreseeable future.
Interest rates have been lifted three times this year in a bid to bring down inflation from 40-year highs, but officials have stressed the US central bank has further to go and these rate hikes will not go far enough.
Although Monday’s stock market declines appeared to contrast with a strong rally in the third quarter, investors have warned that the earlier gains were not evidence of an increase in investor optimism after a relatively poor start to the financial year.
The Federal Bank chair Jay Powell is expected to reaffirm his commitment to aggressively increasing interest rates at the central bank’s annual gathering in Jackson Hole, Wyoming this week.
The rate hike from the Federal Bank was quickly reflected in government bond markets, with the yield on the policy-sensitive 2-year Treasury note rising 0.06 percentage points to 3.32 per cent.
The 2-year yield has risen from less than 1 per cent at the end of last year, and was at about 2.5 per cent as recently as late May. The yield on the benchmark 10-year note rose above 3 per cent for the first time in a month.
