Concerns about inflation in the U.S. caused major selloffs in many company sectors and caused U.S. indexes to drop for a second consecutive day. The Dow Jones Industrial Average fell nearly 475 points marking the index’s sharpest one-day decline since February.
Fears for rising inflation are not new; they have been lingering over the US markets for most of 2021 as the national economy got a boost from pent-up demand and government stimulus. These concerns have caused drops in growth stocks and stocks in the tech sector.
The Nasdaq Composite fell 12.43 points, or 0.1% closing higher than its highest 2.2% decline during the day. The S&P 500 fell 36.33 points, or 0.9% also closing higher than the biggest drop it reported during the day. Treasury yields were steady posting their third consecutive session of gains while the dollar rose.
Investors are waiting for inflation data and government debt sales in the U.S. These events could cause market volatility. Consumer-price inflation is expected to accelerate.
Federal Reserve Governor, Lael Brainard said on Tuesday that the U.S. central bank is not close to achieving its inflation and employment goals with risks looming over the positive U.S. outlook. Other Fed officials have recently said that the economy still needs to be supported by the central bank’s close-to-zero interest rate and its $120 billion in monthly bond purchases.
The statements did not re-assure investors’ concerns over inflation and a stricter monetary policy. Investors still believe that inflation will rise sharply in the next few months due to after-pandemic spending, supply shortages and rises in commodity prices.
In other markets, the Hang Seng (HK50) Index and Japan’s Nikkei 225 (JP225) posted losses. US oil was steady above $65 while the Colonial Pipeline, the biggest U.S. pipeline is still closed after experiencing a cyberattack which caused fuel shortages in some parts of the U.S.