US stocks fall following hawkish comments from Fed official
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Traders work on the floor of the New York Stock Exchange.
PHOTO: REUTERS
NEW YORK (AFP) - Wall Street stocks finished sharply lower on Tuesday (April 5) following hawkish comments from a top United States Federal Reserve official that boosted expectations for more interest rate hikes.
Saying inflation must be reined in, Fed Governor Lael Brainard warned the central bank was "prepared to take stronger action" if warranted and could move to reduce the Fed's massive bond holdings as soon as its May meeting.
The remarks helped lift the yield on the 10-year US Treasury note above 2.5 per cent, well above where it was throughout the Covid-19 pandemic.
"We already had the yields moving higher but after Lael Brainard's comments, it just poured some fuel on the fire," said FX Jefferies managing director Brad Bechtel.
The Dow Jones Industrial Average dropped 0.8 per cent to 34,641.18.
The broad-based S&P 500 fell 1.3 per cent to 4,525.12, while the tech-rich Nasdaq Composite Index slumped 2.2 per cent to 14,204.17.
Dr Brainard's comments came as markets were already girding for tougher sanctions on Russia amid international outrage at carnage discovered in the Ukrainian town of Bucha following the withdrawal of Russian troops.
US service sector growth accelerated in March as worker shortages and Covid-19 cases eased, but firms continued to face supply challenges, according to an Institute for Supply Management survey released early in the day's session.
Among individual companies, Twitter advanced 2 per cent after announcing that Tesla chief executive Elon Musk would join its board. The billionaire disclosed on Monday that he has become the company's largest shareholder.
