![]() ![]() Higher rates mean that future earnings will be worth less than they are today.Ĭyclical stocks also dropped Tuesday. These rate-sensitive companies have high price-to-earnings ratios because they’re typically valued on future profits and pay no dividends. Santiago/Getty Imagesĭow falls nearly 1,000 points on rate hike fears and poor earnings from Verizonįast-growing tech stocks are closely linked to the decisions of the Federal Reserve. Traders work on the floor of the New York Stock Exchange during afternoon trading on Apin New York City. The rate increases are meant to quell runaway inflation, but investors are more worried that an interest rate spike will slow consumer spending and the housing market, ushering in the next recession. The S&P fell by 2.8%.Īfter Federal Reserve chairman Jerome Powell indicated last Friday that there will likely be aggressive interest rate hikes next month, the Dow fell about 980 points, or 2.8%. It’s now 22% off of its high, and posted a 52-week low Tuesday. The tech-heavy Nasdaq dropped about 4%, further retreating into bear-market territory. Microsoft’s earnings exceeded analysts’ expectations, but the stock remained flat in extended trading. The stock fell more than 5% in extended trading. (GOOGL) missed estimates on Tuesday afternoon, bringing in $24.62 per share, versus the $25.91 expected, according to Refinitiv. The losses were led by mega cap tech stocks as investors await key corporate earnings reports this week.įirst quarter results from Google’s parent company Alphabet The Dow fell 810 points, or 2.4%, as an April sell-off spurred by fears of an economic slowdown continued following Monday’s short-lived recovery. ![]()
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