All of Monday and part of Tuesday were marked by a sharp rise in technology stocks on Wall Street. However, there was a reversal in the later part of Wednesday’s trading, and stocks ended slightly weaker in New York.
Decline on the New York Stock Exchange
The main index of the New York Stock Exchange fell 0.2 percent. The Dow Jones Industrial Average weakened just 0.14 and the tech-heavy Nasdaq shed 0.25 percent. While on Monday and Tuesday US stocks rose as if someone had sprinkled them with living water, Wednesday’s trading ended in the red.
Positive data from the US labour market
Paradoxically, positive data from the US labour market are to blame. The number of jobs in the private sector increased in September. This means that the labour market has so far been significantly resilient to the economic recession in the US. However, the Federal Reserve’s plans to reduce inflation soon are hampered, as the labour market is still showing great strength, manifested by too much wage growth. Thus, creating a breeding ground for further inflation to rise rather than for inflation to fall.
The stock markets thus interpreted the information to mean that the Fed will raise interest rates sharply at the next monetary policy meeting, at least by 0.75 percentage point as in the previous three cases.
