Nasdaq Loss 1.7% due to Bond Yields in the US Stock Market

United States – The US stock market continued to drop on Thursday, November 3, after the Fed or Federal Reserve Chairman strengthened his commitment to aiding inflation through higher interest rates.

The US stock market endured to drop on November 3, and it was after the commitment of Jerome Power, the chairman of the Federal Reserve or Fed, regarding the ruling on inflation. He committed to reining in inflation with more interest rates, which caused the yields of bonds to go higher.

The Dow Jones Industrial Average decreased 0.5% or 147 points, while the S&P 500 dropped 1.1%. The Nasdaq Composite dropped 1.7% after all these indexes decreased last Wednesday, November 2, wherein Nasdaq decreased over 3%.

Technology stocks are affecting the US stock market more, causing more damage to the indexes. The Dow fared more because it was the least biased in the technology segment. Many sectors finished higher, while the S&P 500 technology segment decreased by about 3%.

The increasing rate environment is insisting yields on long-dated bonds more. It makes future gains less valuable, while many tech companies still expect a big income to come somewhat into the future.

Michael Reinking, a New York Stock Exchange market strategist, said there’s a lot of work to do, and the tempo may slow down the extreme destination, probably more than the last forecast.

On another note, the Fed raised the fund’s rate of federal by three-quarters of a percent-point while maintaining a fight against high inflation by trying to lessen economic demand. The formal statement of the central bank acknowledged that need and the inflation rate should drop on a delay to when the interest rates started rising. It indicates that the rate hikes’ pacing should slow down. In the press conference, Powell hits a different tone. He mentioned that it’s probable that the Fed might lift the fund’s rate to a higher “terminal” rate.

The US stock market felt the repercussions. The Treasury yield increased by 4.699%, a new multi-year high. The yield on the benchmark of the US Treasury for ten years increased by 4.123%, where it started at 4.05% at the beginning of the week. Higher yields send the US dollar higher, with the Dollar Index in the US.

Many US stocks encounter problems because of the stronger dollar. Multinational companies in the US witness little earnings dollars when they read sales from abroad into a firmer greenback. Estee Lauder (EL) generates most of its sales abroad, dropping over 8% after the company reduced income guidance partly because the dollar is stronger.

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