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Wall Street fell to its lowest value of the year, dragged by the collapse of the pound sterling and fears of a global recession

A worker at the New York Stock Exchange (REUTERS / Brendan McDermid)

Stocks fell on Wall Street and pushed major indexes down furtherwhich collapsed to its lowest level of 2022while recession fears grow.

The S&P 500 fell 1%, the Industry average Dow Jones 1.1% down and the Nasdaq down 0.6 percent. Losses were widespread and included banks, health companies and retailers.

The The British pound fell to a record low against the dollar and investors continued to dump the public debt British as a sign of dissatisfaction with the broad plan of tax cuts announced in London last week.

European markets were mostly down. The director of the European Central Bank warned that the economic perspectives “are darkening”, as high energy and food prices, caused by the war in Ukraine, suppress consumers’ purchasing power. Francethe EU’s second largest economy, predicts a significant slowdown economic growth next year.

Losses were widespread in US markets and incl banksthe companies Sanitary and the values energetic.

Workers at the Stock Exchange (REUTERS/Andrew Kelly)
Workers at the Stock Exchange (REUTERS/Andrew Kelly)

The operators of casinos y resorts was a bright spot and smaller company stocks also lost ground.

The subdued start to the week comes amid a prolonged decline in major indexes. The benchmark S&P 500 index lost more than 7% in September. Shares were hit by concerns about a inflation persistent alta and the risk that central banks economies in a recession while trying to cool down the high prices of everything from food to clothes. Investors have particularly focused on the Federal Reserve and its aggressive increases in interest rates.

The Federal Reserve's decision will affect the economy around the world (REUTERS / Brendan McDermid)
The Federal Reserve’s decision will affect the economy around the world (REUTERS / Brendan McDermid)

“We are starting to see a shift from fears about inflation and the Federal Reserve to global economic concerns,” said Mark Hackett, head of investment research at Nationwide. “We have reached a degree of universal pessimism.”

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The Fed raised its benchmark interest rate again last week, which affects many consumer and business loans, and now stands at a range of 3% already 3.25 percent. At the beginning of the year I was practically there zero. The Federal Reserve also published a forecast that suggested its benchmark rate could be 4.4% by the end of the year, one point higher than forecast in June.

The goal is make borrowing more expensive and reduce spending, which would cool inflation. But the US economy already is slower and Wall Street is concerned that rate hikes by the Federal Reserve will slow also the economy and cause a recession.

Rising interest rates hurt all types of investments, especially expensive technology stocks, and the market suffered a broad decline as rates rose. Treasury yields hit multi-year highs as interest rates rise.

Treasury yield The 2yr, which tends to track expectations for Federal Reserve action, rose significantly to 4.31% from 4.21% on Friday. This is at its highest level since 2007. The 10-year Treasury yield, which influences mortgage interest rates, rose to 3.88% from 3.69%.

The recent rise of the dollar against other currencies worries many countries. It hurts the profits of American companies doing business abroad, and puts much of the developing world in financial straits.

Companies are nearing the end of the third quarter and investors are preparing for the next round of earnings reports. This will give them a better idea of ​​how companies deal with sustained inflation.

Investors also look at several economic reports for this week, it will provide more details on consumer spending, the labor market and the overall health of the US economy.

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The latest report on consumer confidence is published on Tuesday, corresponding to September, prepared by the business group The Conference Board. The government will publish its weekly report on unemployment benefits on Thursday, along with an updated report on second-quarter gross domestic product.

On Friday, the government will release another report on personal income and spending that will help provide more detail on where and how inflation affects consumer spending.

(With information from AP)

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The pound has fallen to a record low against the dollar and the euro is also trading lower

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