The stock market experienced a massive fall on Monday given the fast-approaching release of the inflation data and increased interest rates. There was a significant decline in US stocks values caused by a decrease in the large-cap bond purchase. The US yields continued to surge as bond market participants are now securing their profits. The treasury yield grew to its highest in three years yesterday, with the dollar index coming above 100.
This so alarmed investors as such a high yield over three years in the benchmark US 10-year count would start to slow the economy and diminish future yields. Most investors now look ahead to the forthcoming Fed meeting for signs of what impact inflation will have on corporate profits.
Virtually all US stocks lost significant value yesterday. This is because most investors preferred to withdraw their investment and watch the new policy unfold before they can now decide which to buy again.
The US stocks such as Nasdaq composite fell 3%, S&P was down by 2.1&, Dow Jones was down by 2.1%, US100 fell by 2.37%, Apple fell by 2.55%, Tesla - 4.85%, Netflix - 2.33% and so on.
The Fed has hinted earlier that the interest rate hike this time will come sooner than expected and they hope to increase the interest rate by 50 bps. The inflation data for executing these interest rate hikes are expected to be released during this month's next Fed meeting.
It is always a wise decision to purchase stocks when their prices are meagre. Hence many believe that the current dip is simply an opportunity for new investors to feel their portfolio against future demands.