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Saturday, May 21, 2022
Stocks & Shares

U.S. stocks end lower amid broad sell-off

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All three main Wall Street benchmarks erased gains made during a relief rally on Wednesday

U.S. stocks ended Thursday sharply lower amid a broad sell-off, as investor sentiment cratered in the face of concerns that the Federal Reserve’s interest rate hike the previous day would not be enough to tame surging inflation.

All three main Wall Street benchmarks erased gains made during a relief rally on Wednesday, with the Nasdaq posting its biggest one-day percentage decline since June 2020 and its lowest finish since November 2020.

The Dow’s decline was its worst daily performance since October 2020.

Technology megacaps slumped. Google-parent Alphabet Inc, Apple Inc, Microsoft Corp, Meta Platforms, Tesla Inc and Amazon.com all fell between 4.3% and 8.3%.

However, it was not just high-growth stocks, which have struggled in 2022 as the prospect of rate rises had investors questioning their future earnings potential. The selloff hit all areas of the market, as traders headed for the exits.

Investors aren’t looking at fundamentals (such as earnings) right now, and this is more of a sentiment issue, said Megan Horneman, chief investment officer at Verdence Capital Advisors.

The U.S. central bank on Wednesday raised interest rates by half a percentage point as expected and Fed Chair Jerome Powell explicitly ruled out a hike of 75 basis points in a coming meeting.

Traders, however, on Thursday raised their bets on a 75 basis-point hike at the Fed’s June meeting.

Worries about Fed policy moves, mixed earnings from some big growth companies, the conflict in Ukraine and pandemic-related lockdowns in China have hammered Wall Street recently, overshadowing a better-than-expected quarterly reporting season.

The Dow Jones Industrial Average fell 1,063.09 points, or 3.12%, to 32,997.97, the S&P 500 lost 153.3 points, or 3.56%, to 4,146.87 and the Nasdaq Composite dropped 647.17 points, or 4.99%, to 12,317.69.

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