Wall Street’s September swoon is worsening, and US stocks are falling toward their lowest level since June.
Stocks have tumbled this month, which is on track to be Wall Street’s worst of the year, as the realisation sets in that the Federal Reserve will indeed keep interest rates high for a long time. The growing understanding has sent yields in the bond market to their highest levels in more than a decade, which in turn has undercut prices for stocks and other investments.
While housing and manufacturing have felt the sting of high interest rates, the economy overall has held up well enough to raise worries that upward pressure still exists on inflation. That pushed the Fed last week to say it will likely cut interest rates by less next year than earlier expected. The Fed’s main interest rate is already at its highest level since 2001 in its drive to get inflation back down to its target.
Besides the threats of higher interest rates for longer and a possible federal shutdown, Wall Street is also contending with higher oil prices, shaky economies around the world, a strike by US auto workers that could put more upward pressure on inflation and a resumption of US student-loan repayments that could dent spending by households.
Amazon tumbled 3.7 per cent as it faces an antitrust lawsuit from The Federal Trade Commission and 17 state attorneys general. The lawsuit alleges that the e-commerce behemoth uses its position in the marketplace to inflate prices on other platforms, overcharge sellers and stifle competition.Cintas dropped 4.4 per cent for one of the larger losses in the S&P 500.
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