Wall Street Slaps Day After Fed Rate Announcement, Technology Stocks Fall

JAKARTAKOMPAS.com – United States stock exchange or Wall Street fell sharply on Thursday (5/5/2022) local time or, the day after the Federal Reserve or the Fed announced a 50 basis point interest rate hike.

This sharp decline was the deepest since 2020. The Dow Jones Industrial Average (DJIA) lost 1,063 points, or dropped 3.12 percent, to close at 32,997.97. The Nasdaq Composite also plunged 4.99 percent to end at 12,317.69. The S&P 500 fell 3.56 percent to 4,146.87.

“If the index goes up 3 percent and then gives up half a percent the next day, that’s normal. But seeing yesterday and today upside down, it’s really amazing,” said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research. CNBC.

Read also: Wall Street Rises Sharply After The Fed’s Rate Increase Announcement

Tech stocks were the most pressured during trading hours Thursday, with Facebook’s parent Meta Platforms and Amazon down 6.8 percent and 7.6 percent, respectively. Likewise, Microsoft shares plunged about 4.4 percent, Salesforce fell 7.1 percent, and Apple fell nearly 5.6 percent.

E-commerce stocks took the lead on Thursday’s losses following some disappointing quarterly reports. Etsy and eBay plunged 16.8 percent and 11.7 percent, respectively, after releasing lower-than-expected earnings reports.

Read also: Wall Street Slightly Rises Ahead of The Fed’s Interest Rate Announcement

The Treasury market also reversed dramatically after rallying in Wednesday’s trading. Yields on the 10-year U.S. Treasury moved against prices, and jumped back above 3 percent on Thursday and hit their highest level since 2018.

Zachary Hill, head of portfolio strategy at Horizon Investments, said rising interest rates could put pressure on growth-oriented tech stocks, as they make tech company earnings less attractive to investors.

“Despite the tightening over the past few months, it’s clear that the Fed wants to see further tightening. A higher equity valuation is also not what the Fed wants, unless supply chains recover quickly and the Fed becomes more hawkish once again,” Hill said.

Read also: Wall Street Ends Green, Technology Stocks Rebound

Stocks along with growing economies also took a hit on Thursday, with Caterpillar down nearly 3 percent, JPMorgan Chase down 2.5 percent, and Home Depot down about 5 percent.

The sell-off in US stock exchanges on Thursday was sizable, with more than 90 percent of the S&P 500 down. Even the best performing companies for the year, such as Chevron, Coca-Cola and Duke Energy, were also dragged down less than 1 percent.

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