Heavy sales on Wall Street with the S&P 500 swooping into Bear territory. The index of the 500 largest US blue chips slipped back by 3% to 3,781 points, levels that are more than 20% below the highs reached at the beginning of the year and therefore mark the potential entry into the ‘bear market’. Worse is the Nasdaq composite with -3.7%, while the Dow Jones limits the drops to -2.4%. Among the big names on Wall Street, the drops in Tesla (-6.85), Netflix (-6%) and Amazon (-5.44%) stand out. Limit drops to -3% Apple.
Among investors, after the jump in US inflation, fears of a 75bp rate hike by the Fed are growing to combat upward inflationary pressures. The Fed has not raised rates by 0.75% since 1994. At the same time, fears of a recession are growing with a sharp rise in sovereign bond yields, especially the short part of the curve. The yield on the two-year US Treasury rose to 3.25%, its highest since December 2007, equalizing the 10-year yield. A situation in which short-term yields outweigh long-term yields – the inversion of the yield curve – is historically seen as a sign of a potential recession.