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US stocks extend declines as risk sentiment sours

US stocks extended their declines in early trading, following investors’ assessments of their growth prospects amid monetary policy tightening. These included the impact on earnings of higher prices in the projections.

All 11 major industrial groups in the S&P 500 fell, with consumer stocks leading the decline. Nasdaq 100 fell as much as 2.2% after Tuesday’s risk rally. Target Corp. fell more than 20% after cutting its profit forecast due to rising costs. Shares of retailers Walmart Inc. to Macy’s Inc. also fell.

Treasuries were mixed, with the 10-year yield lower after Tuesday’s sell-off. In some of his most aggressive comments to date, the president of the fedJerome Powell said on Tuesday that the central bank of USA will increase interest rates until there is evidence”clear and convincing” That the inflation it’s going backwards

The benchmark S&P 500 is coming off the longest weekly decline since 2011, but rallies in risk sentiment are proving fragile amid tighter currency tightening, Russia’s war in Ukraine and China’s lockdowns over the Covid rebound.

We will have this type of volatility as people jump in and look for opportunities to buy as markets fallShana Sissel, chief investment officer at Cope Corrales, said on Bloomberg Television, referring to the Wall Street rebound. She added that the fed going to have a hard time achieving a soft economic landing.

The latest data from Europe did not offer any reassurance. New vehicle sales contracted for the 10th month in a row as the industry remains mired in supply chain crises, while the inflation of the euro area stagnated at a record level. Yields on most European bonds rose as traders increased bets on the European Central Bank tightening.

Meanwhile, the inflation in the United Kingdom rose to its highest level since Margaret Thatcher was prime minister 40 years ago, increasing pressure for the government and the central bank to take action. The pound weakened as traders speculated that the Bank of England will struggle to control prices and avoid a recession.

On the other hand, the Biden administration is poised to completely block Russia’s ability to pay US bondholders after the deadline expires next week, a move that could bring Moscow closer to a default. Sri Lanka, meanwhile, is on the verge of defaulting on $12.6 billion in foreign bonds, a warning signal to investors in other developing nations that rising inflation is about to exact a painful price.

Source: Elcomercio

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