Global Markets Sell-off Intensifies as U.S. Averages Extend Losses

Barry Adams
23 Sep, 2022
New York City

The sell-off on Wall Street intensified as investors are grudgingly adjusting to the new reality of higher interest rates and Fed's commitment to aggressively combat rapid price increases. 

Three back-to-back large-size rate hikes are still not effective in combating elevated inflation, forcing the central bank to continue lifting rates. 

The Fed has revised rates higher five times over the last six months but those sharp rate increases are not denting the sky-high inflation so far. 

Rates are blunt tools and have a lagging effect on the economy, and investors are worried that the economy may dip into a recession before inflation begins to cool. 

The S&P 500 dropped 1.4% and the Nasdaq Composite index 1.35%. 

Crude oil declined $2.60 to $80.93 a barrel and natural gas fell 16 cents to $6.93 a thermal unit. 

The yield on 2-year Treasury notes rose to 4.16%, 10-year Treasury notes rose to 3.71% and 30-year bonds edged up to 3.65%. 

Markets in Europe plunged more than 2% as businesses grapple with soaring energy costs, rising interest rates and weakening economy. 

Moreover, the 2-decade high-dollar is also stoking fears of inflation. 

The U.K. pound dropped to a new 4-decade low $1.11 after the government's mini-budget offered more tax breaks to businesses. 

The euro also dropped to a new 2-decade low of 97 cents against the resurgent dollar. 

The DAX index dropped 2.1% to 12,285.72, the CAC-40 index declined 1.9% to 5,805.65 and the FTSE 100 index eased 1.9% to 7,022.41. 

Asian markets dropped as well on the worries that rising rates around the world will spark a global recession and taming elevated inflation may take another two years 

The Nikkei 225 index declined 0.6%, the Hang Seng index dropped 1.2%, the Shanghai Composite fell 0.6% and the Sensex index eased 1.7%.