Dow Jones closes in the red
Economic data send prices plummeting
12/22/2022, 10:19 p.m
The US Federal Reserve will probably stick to its interest rate policy. This is supported by a high gross domestic product and a good unemployment rate. A big loser among stocks is automaker Tesla.
Surprisingly good US economic data have fueled fears of interest rate hikes and pushed Wall Street into the red. Of the Dow Jones Index the standard values dropped 1.04 percent to 32,990.54 points in New York. The broader one S&P 500 fell by 1.44 percent to 3822.6 points. The index of the technology exchange Nasdaq lost 2.18 percent to 10,476.12 points.
Economic data published shortly before the stock exchange opened surprised the markets. While gross domestic product (GDP) for the third quarter came in higher than expected, initial US jobless claims grew at a slower pace. Both data points to a better development of the US economy than the market had assumed and hint at future moves by the US Federal Reserve (Fed). “GDP data beat expectations,” said Sam Stovall, investment strategist at CFRA Research in New York.
The data fueled fears that the economy was not giving up easily and was bucking the Fed’s tightening interest rate policy. This will likely force the central bank to keep interest rates high for a longer period of time. The Fed recently raised interest rates by half a percentage point to the new range of 4.25 to 4.50 percent. Previously, she had made four major rate hikes in a row – by 0.75 percentage points each time.
Almost all companies in the Dow Jones Index were in the individual values - one exception was sporting goods manufacturers Nike – in the minus. On Tuesday, the sporting goods giant boosted Wall Street with unexpectedly strong quarterly figures. Technology stocks in particular had to accept price losses after the publication of the economic figures due to investors’ concerns about interest rates.
The shares of Apple, Amazon and Microsoft fell up to 3.4 percent. In addition, the titles of Tesla after the publication of a discount campaign on the US electric car manufacturer’s website, the lowest level since November 2020. The shares fell by 8.88 percent to $ 125.35. Earlier, the Elon Musk-led company offered $7,500 in discounts for electric vehicles delivered this month. This fueled investor fears that demand for Tesla vehicles will fall amid high inflation. Separately, according to media reports, the US Senate is investigating whether Tesla is using materials in its production that were manufactured under forced labor in the Chinese region of Xinjiang.