Following the continuous sharp decline last week, the three major U.S. stock indexes experienced “Black Monday” again. According to reports, the sell-off in U.S. stocks intensified on Monday (13th) as investors worried that the Federal Reserve may adopt aggressive interest rate hikes to curb inflation, as well as the prospect of a U.S. recession. The three major U.S. stock indexes fell collectively, and the S&P 500 entered a bear market.
At the same time, investor panic has also spread from the stock market to the cryptocurrency market, and cryptocurrencies have also fallen sharply. Over the past 24 hours, $80 billion has been wiped off the market value of cryptocurrencies worldwide.
The S&P 500 enters a bear market, how can the United States slow down inflation?
According to reports, on Monday, local time in the United States, the Dow Jones Industrial Average fell 876.05 points, or 2.76%; the Nasdaq fell 530.80 points, or 4.68%; the S&P 500 fell by nearly 4%, a decrease of more than 21% from January. %, entering bear market territory for the first time since 2020.
Last week, the World Bank warned that global growth could be hampered, especially if the conflict between Russia and Ukraine continues. According to the report, inflation in the United States is accelerating and running at the fastest pace since 1981, spreading to every corner of the economy. Federal Reserve Chairman Jerome Powell and other officials have repeatedly stressed the need to bring prices back to a stable level to ensure a healthy economy.
According to Xinhua News Agency, the information released by the Fed and market expectations both point to the Fed raising interest rates by 50 basis points at this week’s meeting on interest rates, but the U.S. consumer price index remained high in May, reinforcing the prospect of a 75 basis point rate hike. expected. Barclays, JPMorgan Chase and others have predicted that the Fed will raise interest rates by 75 basis points this week.
Continued high inflation is one reason for the decline in the stock market. Currently, inflation in the UK is over 6%, which means that money invested in the stock market is losing value due to rising prices, as inflation is eroding its value. The ongoing recession is also a big reason, with the outbreak of the new crown epidemic deepening investors’ fears, resulting in a massive sell-off that sent stock prices lower.
Stocks fell, businesses and consumers faced rising costs almost everywhere, and investors feared the Fed would hit the economy as it tries to rein in inflation. Dan Ghent, chief executive of investment advisory firm Ghent Capital Management, said: “As $5-a-gallon gas and higher food costs, rents and home prices all start to take their toll on households, borrowing costs are rising. That in turn hurts consumer spending, which has long been a major driver of the U.S. economy.”
“We can’t let wage prices spiral, and we can’t let inflation expectations get out of hand,” Fed Chairman Jerome Powell said at a news conference with reporters after the Fed’s May meeting. “It’s just something we can’t allow to happen.”