NEW YORK, April 6 — Wall Street stocks finished sharply lower Tuesday following hawkish comments from a top Federal Reserve official that boosted expectations for more interest rate hikes.
Saying inflation must be reined in, Fed Governor Lael Brainard warned the US central bank was “prepared to take stronger action” if warranted and could move to reduce the Fed’s massive bond holdings as soon as its May meeting.
The remarks helped lift the yield on the 10-year US Treasury note above 2.5 per cent, well above where it was throughout the Covid-19 pandemic.
“We already had the yields moving higher but after Lael Brainard’s comments, it just poured some fuel on the fire,” said Brad Bechtel, managing director at FX Jefferies.
The Dow Jones Industrial Average dropped 0.8 per cent to 34,641.18.
The broad-based S&P 500 fell 1.3 per cent to 4,525.12, while the tech-rich Nasdaq Composite Index slumped 2.2 per cent to 14,204.17.
Brainard’s comments came as markets were already girding for tougher sanctions on Russia amid international outrage at carnage discovered in the Ukrainian town of Bucha following the withdrawal of Russian troops.
US service sector growth accelerated in March as worker shortages and Covid-19 cases eased, but firms continued to face supply challenges, according to an Institute for Supply Management survey released early in the day’s session.
Among individual companies, Twitter advanced 2.0 per cent after announcing that Elon Musk would join its board. The Tesla CEO disclosed Monday that he became the company’s largest shareholder. — AFP