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Wall Street has witnessed the most significant fall this week since December 15. What happened on the stock market today was the consequence of the growing economic meltdown. According to a survey, the leading cause of this downfall was the S&P Global Purchasing Manufacture index. This firm is progressing towards expansion for the first time in eight months.
This is another cold reminder that inflation will remain hotter than one has expected. Due to the sliding of Wall Street, its indexes drop more than 1%. Resulting in a potential loss of global firms, S&P fell by 1.1%, the Dow Jones Industrial Average dropped 697.1 points, while the composite loss of Nasdaq was 2.5%.
This big hit on Tuesday had dropped extensive tech stocks, including Tesla Inc., Amazon, Microsoft, and Google Parent Alphabet. The average drop in the stock of these global brands varies between 2.1% and 5.3%.
U.S stock market today has seen a massive recession in the growth stocks of other notable companies. There was a drastic decline of Semiconductor points by 3.3%. Shares of Home Depot Inc. experienced a massive drop of 7.1%. Similarly, Smaller rival Lowe’s Cos Inc. shares also fell 5.1%.
Carol Schleif, Chief Investment Officer, expressed his viewpoints, “Today, the realization is that the Fed is not kidding around about higher for longer, and in fact, it might be a little bit higher for a little-to-a-lot bit longer.”
After this massive stock drop, the biggest fear is how high the Federal Reserve will take the interest rates to balance the situation.
However, one could quickly determine that higher interest rates will give way to inflation. But this time, inflation can lead to recession due to the fluctuating economy. Now, the inflation rate is a mile from the Fed’s target of 2%.
Adding to this, Sonder said on Friday, “I think something would have to give either broadly in the economy, or more specifically in the labor market, to bring the immaculate disappearance of inflation.”
All this situation painted a grim picture of future high inflation. This will ultimately squeeze the profit margins and deplete the resources.
