Shares on Wall Street fell on Tue with tech bearing the brunt of the selling, after Fed Governor Lael Brainard, who traditionally favors loose policies and low rates, gave a very hawkish speech.
The Dow Jones Industrial Average lost 280.70 pts, or 0.8%, to close at 34,641.18. The broader S&P 500 index fell 1.26%. The tech-heavy Nasdaq Composite retreated 2.26%. The small cap Russell 2000 dropped 2.36%.
Brainard called the task of curbing inflation pressures “paramount” and said the central bank may start reducing its balance sheet rapidly as soon as May. Shares of Amazon (AMZN US, -2.55%), Apple (AAPL US, -1.89%), Alphabet (GOOGL US, -1.67%), Microsoft (MSFT US, -1.30%) and Meta Platforms (FB US, -0.88%) were lower on Tue.
The yield on the 10-year Treasury note soared 15.18 basis points (bps) to 2.5674%. The yield on the 2-year Treasury note notched up 9.18 bps to 2.5139%. The 2- versus 10-year Treasury spread is no longer inverted.
The US and allies are coordinating fresh sanctions on Russia, including a European Union ban on coal imports. Nevertheless, crude oil prices fell. The front-month Brent and WTI futures closed down 89 cents at US$106.64/bbl and $1.32 at US$101.96/bbl respectively.
The ICE dollar index (DXY), which measures the strength of the greenback against a basket of currencies, rose 0.48% to 99.472.
The most actively traded US gold futures (Jun) contracts settled down $6.50, or 0.3%, at US$1,927.50/oz. May silver, which is the most actively traded silver futures, fell 5.6 cents, or 0.2%, to end at US$24.534/oz.
European equity markets finished mixed on Tue. The UK FTSE gained 0.73%, France's CAC 40 fell 1.28%, while the German DAX retreated 0.65%. Vestas Wind Systems (VWS DC, +8.59%) jumped after Credit Suisse upgraded the stock to “outperform” from “underperform” on the shift away from fossil fuels.
Traders are pricing in the risk that France’s Emmanuel Macron might lose, ahead of Sun's first round of the French presidential elections. Options that protect against a drop in the euro over the next week have risen. The spread between 10-year French and German yields climbed to the highest since Apr 2020.