Rising Interest Rate & Inflation causing worry to Wall Street

Further declines in major tech stocks drove the major Wall Street indices lower, further pushing the market down in the first week of the year. On Thursday, the S&P 500 traded higher and lowers for most of the day before closing 0.1% lower. The weakness of large corporations such as Apple was the main culprit. The NASDAQ fell 0.1% and the Dow Jones Industrial Average fell 0.5%. The small caps closed higher in resistance to the trend. Bond yields continued to rise a day after the Federal Reserve indicated it was ready to raise interest rates to fight off inflation.

Stocks have been volatile this week as traders reacted to large increases in bond yields. The S&P 500 and the Dow hit all-time highs on Monday and lost positions the following day. The leading index is now showing weekly losses. Investors are closely monitoring the impact of rising inflation on consumers and businesses. They also overseen the Fed’s plans to cut ultra-low interest rates. Minutes of the central bank meeting in December showed policymakers expressed concern that inflation, the highest in 40 years, is spreading into more parts of the economy and will last longer than previously anticipated.

The central bank has already said it will cut bond purchases, which has helped keep interest rates low. Investors are monitoring the impact of these declines and assessing how quickly and how often the central bank will raise interest rates. Wall Street also analyzed several economic reports this week. On Thursday, the Institute for Supply Management said growth in the US services sector, where the majority of Americans work, slowed in December after record growth over the past two months.

The Labor Department said the number of Americans filing for unemployment benefits rose last week but remains at a historic low, suggesting that the labor market remains strong. The agency will release its monthly employment report on Friday.