Wall Street Indexes Plunge Amid Rising Interest Rate Fears

Concerns dominated investors amid expectations that the Federal Reserve will continue its tightening policy to raise interest rates for longer than expected in precedence.

In February, in light of the strong economic data released by the US, which indicated that the US economy is still very strong, it became clear that all the hikes made by the Federal Reserve have not held back the US economy.

And expectations have started to indicate that the Fed is likely (by 23%) to raise interest rates by 50 basis points instead of 25 at its next meeting on March 21-22.

Expectations also indicate that interest rates will peak in September at 5.4%.

bank of America Global Research also warned that the Fed could hike interest rates to around 6%.

The major Wall Street indexes fell in yesterday’s session, ending a difficult month for the US stock market, despite a strong start to the year.

The major indexes reversed their monthly gains in January, with the Dow Jones Industrial Average posting a 4.2% decline in February, compared with a 2.8% increase in January.

Although the S&P posted a 6% gain in January, the index lost about 2.6% in February.

The information technology sector was the only sector in the S&P index, which ended the month in up 0.3%, on monthly declines in the consumer staples and utilities sectors, which recorded monthly losses for the third month in a row, in the longest streak of monthly losses for both sectors since the first half of 2018, according to Dow Jones data.

The Nasdaq lost more than 1% for the month, as measured by an increase of more than 11% in January.

Stocks’ decline in February was due to pressure from rising US bond yields, which rose, driven by diminished hopes of an early change in Fed policy.

Gold recorded a 5.6% decline in February, marking the worst performance monthly since June 2021, when it fell more than 7%.

In oil markets, US NYMEX crude saw monthly declines of 1.7% in February, while Brent crude saw less severe declines of 0.7%.

Oil prices eased over the month in light of a colder-than-expected winter in the US e in Europe. In addition, the economic data released by the United States strengthened the dollar.