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Wall Street stocks slip as investors fret over US interest rates

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U.S. stocks fell Wednesday, all but wiping out hopes of a celebratory rally to end a disastrous year for stocks.

The Wall Street benchmark S&P 500 was down 0.66% by mid-afternoon, while the tech-heavy Nasdaq Composite was down 0.8%.

Stocks have plunged this year as central banks have raised interest rates to stem inflation. The MSCI All-World Index, which tracks all globally traded stocks, is down 20.3% so far this year, maintaining its worst annual performance since 2008. The S&P 500 is also down 20.3%. Tech stocks are particularly sensitive to rising interest rates, so the Nasdaq took a bigger hit this year, dropping 34.4%.

The S&P 500 and Nasdaq are also on track for their worst annual performance since 2008.

Federal Reserve officials have suggested that US interest rates may need to rise above 5% from their current levels of 4.25-4.5% due to high inflation.

“We expected a seasonal rally, but it didn’t happen,” said Steve Holt, head of international equities sales at Baird. Tesla shares fell 40% in a month, Apple fell 11%, and Amazon fell 11%.

“It’s the first time in 30 years that the Fed has been so aggressive to the market,” Holt added. “Value investors who want to get rich slowly are having a better time.”

Hong Kong’s Hang Seng Index rose 1.6%, with all sectors except real estate in positive territory. The index is set to end the year 14% lower, but like Beijing he’s up a third since the end of October. Relaxation of coronavirus pandemic restrictions Since early 2020, it has constrained China’s economic growth.

In China, the National Health Commission announced on Monday that it will lift quarantine requirements for inbound travelers from 8 January.

As a result, cases have skyrocketed, with officials estimating that around 250 million people, or 18% of the population, became infected with Covid in the first 20 days of December.

Still, Iris Pang, chief economist for Greater China at ING, said Beijing’s easing of its zero-Covid policy would likely help, even as economic growth slows in Europe and the US and global demand for Chinese nationals slows. It will especially boost domestic consumption and travel-related industries, he said. product.

“Our house view is that the US and Europe could enter a mild recession in the first half of 2023,” Pang said. “Thus, the Chinese government expects to continue construction of unfinished housing projects and continue planning for transportation, energy and technological infrastructure to strengthen its financial capacity to support the domestic economy. ”

China’s CSI 300 index, which lists Shanghai and Shenzhen, fell 0.4% on Wednesday, but is up 10% since mid-October.

Commodity prices fell, with Brent crude, an international oil benchmark, down 1.9% to $82.73 a barrel. His TTF gas futures in the Netherlands, the European benchmark contract, fell 7.4% earlier in the day due to milder-than-expected weather and lower demand, but fell 0.6% to €82.40 per MWh. was traded at

Short-term, interest-rate sensitive US Treasuries remained stable, with the two-year yield dropping 0.01 percentage points to 4.36%. Yields on his benchmark 10-year note rose 0.03 percentage points to 3.88%, the highest since early November. As prices rise, yields fall.

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