Interest rate concerns are jeopardizing the recent recovery

NEW YORK (dpa-AFX) – The recent recovery on Wall Street is likely to falter on Wednesday. Around three quarters of an hour before trading began, the broker IG rated the leading index Dow Jones Industrial 0.56 percent lower at 32,469 points. Market traders justified the clouded-down mood with the renewed concern that the US Federal Reserve could slow down the economy if it was too tight.

Fed Chair Jerome Powell recently said the central bank would “not hesitate” to tighten monetary policy beyond neutral levels in a bid to curb high inflation as interest rates rise. However, should interest rates rise so sharply that consumer demand for credit and business investment activities flag, the economy could slide into recession.

The US construction industry developed rather weakly in April. The number of new houses started and the number of building permits declined.

Among the individual stocks, Target shocked its shareholders: after Walmart the day before, this retailer also had to cut its profit forecast. Target referred to the significant increase in costs in the first quarter, which means that the company is likely to be less profitable this year than initially targeted. Shares fell by around a quarter in premarket US trading.

Meanwhile, the hardware store group Lowe’s was disappointing with its like-for-like sales development, after the competitor Home Depot had provided a positive exclamation mark the day before. The bad weather hit the office at Lowe?s. The papers lost more than four percent before the market./la/jha/

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