The US stock market fell sharply on Thursday, completely erasing the gains of the previous trading day. Risk assets generally fell, pushing technology stocks to their biggest decline in more than a year and a half. The S & P 500 index recorded its biggest one-day decline since last Friday, with 11 major industry sectors falling by at least 1%. Losses were led by information technology, non essential consumer goods and communication services. The Nasdaq 100 index recorded its biggest decline since September 2020, and the Dow Jones industrial average, which tracks blue chips, fell 3.1%.
The S & P 500 index fell 3.6% to 4146.87
The Dow Jones Industrial Average fell 3.1% to 32997.97
The Nasdaq composite index fell 5% to 12317.69
The Nasdaq 100 index fell 5.1% to 12850.55
The Russell 2000 index fell 4% to 1871.148
"Yesterday's sharp rise is not rooted in reality. Today's sharp decline is a correction for this misplaced prosperity," said Ben Kirby, CO head of investment at Thornburg investment management. "Although the sell-off is disappointing for some investors, the good news is that the ups and downs of this week's roller coaster have brought us back to Monday's level."
After a strong rebound on Wednesday afternoon, both the S & P 500 index and the Nasdaq 100 index recovered their losses in the morning and closed up at least 3%. The constituent stocks of the Nasdaq 100 index were almost wiped out on Thursday, and the proportion of constituent stocks of the S & P 500 index closed down as high as 96%. The volatility gave investors another taste of the pain they experienced last month, when the S & P 500 index recorded its biggest decline in more than two years.
Economists continue to debate whether the Fed's aggressive tightening cycle will eventually plunge the US economy into recession again. The actual volatility of the S & P 500 index in the past 10 days has soared to a new high since June 2020, but it is still far below the level at the peak of the COVID-19.
"The Fed's rapid interest rate hike is dangerous to the stock market. Today we see a living example," said Chris zaccarelli, chief investment officer of instant advisor alliance. "In the end, if we don't fall into recession, of course, it seems unlikely this year, then the S & P 500 index is far below 3838, it's difficult to stand."
Although the Fed raised interest rates by 50 basis points, the highest in more than 20 years, Powell denied the possibility of raising interest rates by 75 basis points, which initially eased investor tensions. However, he also hinted that the Fed was still trying to curb high inflation and that the "next few meetings" might continue to raise interest rates by 50 basis points.