Wall Street closed on a somber note this Thursday, as major indices struggled to maintain their footing in the face of renewed concerns about interest rates and inflation. The Dow Jones Industrial Average recorded a loss of 291 points, while the S&P 500 and the Nasdaq Composite both saw declines of 0.8% and 1.2% respectively. This marked the third consecutive session of losses, leaving investors on edge.
Fed’s Hawkish Stance and its Impact on Tech and Healthcare Sectors
The release of minutes from the Federal Reserve’s July meeting sent ripples through the market. The minutes revealed that most policymakers were focused on combating inflation, hinting at a hawkish stance on monetary policy. This announcement pushed 10-year Treasury yields to levels not seen in almost 16 years.
The tech sector, known for its sensitivity to interest rates, bore the brunt of this development, with giants like Meta and Apple facing drops of 3.1% and 1.5% respectively. Healthcare shares were not immune either, with CVS plummeting by 8.1% after Blue Shield’s decision to reduce its reliance on the company as a pharmacy benefit manager. UnitedHealth and Cigna, both of which also have pharmacy benefit manager units, experienced respective declines of 2% and 6.3%.
Cisco’s Positive Momentum Amid the Turmoil
Amid the sea of red, there was one bright spot in the form of Cisco. The tech giant managed to buck the trend, surging by 3.3% on the back of impressive quarterly results. This uptick in Cisco’s performance offered a glimmer of hope amidst the broader tech sector’s struggles.
Global Government Bond Yields on the Rise
It wasn’t just the US markets feeling the impact of interest rate concerns. Across the world, government bond yields continued their upward trajectory as investors grappled with the anticipation of prolonged elevated interest rates due to persistent high inflation. The minutes from the Fed’s meeting only served to solidify this sentiment. As officials highlighted significant upside risks to inflation, potentially necessitating further tightening of monetary policy.
Lithium Carbonate Prices Dwindle Amidst Macroeconomic Challenges
Shifting our focus to the commodities market, lithium carbonate prices took a hit, sinking to a three-month low of CNY 350,000 per tonne in August. The decline was attributed to multiple factors, including low demand from key battery manufacturers. Battery producers for new energy vehicles exhibited muted buying activity throughout the third quarter, with their input inventories brimming and previous government-led subsidies drying up.
Moreover, the concerning macroeconomic landscape in the Chinese economy contributed to sluggish consumer spending on electric automobiles. While new energy vehicle sales in China boasted a 32% year-on-year growth, reports indicated that several Chinese new-energy vehicle producers were compelled to slash prices in order to meet their second-half sales targets.
Bitcoin’s Roller Coaster Ride
The cryptocurrency market was not immune to the broader market volatility. Bitcoin, the flagship cryptocurrency, witnessed a decline of 4.36% in this Thursday’s trading session, closing at 27,676 US Dollars. Over the past four weeks, Bitcoin had already experienced a 7.06% decrease. However, despite the short-term turbulence, the cryptocurrency’s price had managed to increase by 18.20% over the last 12 months. Looking forward, predictions pointed to a potential further decline, with Bitcoin expected to be priced at 27,325 US Dollars by the end of the current quarter and at 21,958 US Dollars within the coming year.
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