NEW YORK (dpa-AFX) – The prospect of a tighter monetary policy to combat inflation sent the economically sensitive US technology stocks plummeting on Tuesday. The leading index Dow Jones Industrial (Dow Jones 30 Industrial) came under less pressure. The expectation of further sanctions by the West against Russia also caused uncertainty.
The Dow closed 0.80 percent lower at 34,641.18 points. The broader S&P 500 fell 1.26 percent to 4525.12 points. After the clear gains at the beginning of the week, the technology-heavy NASDAQ 100 now fell by 2.24 percent to 14,820.64 points.
US Federal Reserve Vice Chairman Lael Brainard told a Minneapolis regional Fed event that reducing inflationary pressures was “a priority”. Brainard announced a “series” of rate hikes. Higher interest rates lead to rising financing costs, especially for high-growth tech companies. From May, Brainard also wants to start with a rapid reduction in the total assets, which had massively expanded during the corona pandemic.
With these monetary policy steps, liquidity would be withdrawn from the stock exchanges. Such tighter monetary policy can also be detrimental to equity markets as a whole, as other asset classes then become more attractive. The Fed had already raised the key interest rate in mid-March for the first time since the Corona crisis. The background is the high inflation, which is fueled by rising raw material costs.
After the war crimes in the Ukrainian city of Bucha near Kyiv, the EU Commission presented a proposal for a comprehensive package of new sanctions against Russia. According to EU Commission President Ursula von der Leyen, it includes, among other things, an import ban on coal from Russia.
In terms of individual stocks, shares of Twitter (Twitter) continued their rally at the start of the week and rose around two percent. Tech billionaire Elon Musk is also moving into the company’s board of directors after his surprising entry into the short message service. Musk officially gets more influence on Twitter’s strategy. The boss of the electric car manufacturer Telsa (Tesla) believes in the platform and is also a sharp critic, wrote Twitter boss Parag Agrawal. “This is exactly what we need” for Twitter to become stronger in the long run.
The day before, the company had announced that the Tesla founder would become the largest Twitter shareholder with 9.2 percent. The Twitter papers had responded with a price jump of 27 percent.
Among the weakest stocks in the Nasdaq 100, Moderna’s shares fell by a good six percent. The African Union and the vaccine initiative Covax had decided against purchasing hundreds of millions of additional doses of the Corona vaccine from Moderna. Stockbrokers interpreted this as a sign of dwindling demand as the pandemic subsided in low-income countries.
The euro suffered noticeably from the prospect of tighter US monetary policy and was last listed at 1.0906 US dollars. The European Central Bank had previously set the reference rate at 1.0969 (Monday: 1.1005) dollars. The dollar thus cost 0.9117 (0.9087) euros.
On the US bond market, the yield on ten-year government bonds rose significantly to 2.56 percent and thus to the highest level since the beginning of 2019. In return, the futures contract for ten-year Treasuries (T-Note Future) fell by 0.99 percent to 120.89 points./la/he
— By Lutz Alexander, dpa-AFX —
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