It Was a Rough Day on Wall Street Yesterday

In a reversal of Wednesday’s rally, US investors sold off ~$1.3 trillion worth of stocks in the market's worst day since the pandemic first began.

🔢 By the numbers…

• The S&P 500 lost 3.6%, its second-worst performance of the year. The Dow dipped 3.1%, and the Nasdaq closed down nearly 5% – both of which represent the worst single-day drops since 2020.
• E-commerce stocks were hit especially hard. Several major players reported subpar earnings, including Etsy (-17%), eBay (-12%), Shopify (-15%) and Wayfair (-26%).
• Large tech stocks didn't have too much fun either, with Meta (-7%), Amazon (-8%), Microsoft (-4%) and Apple (-6%) all contributing to the major indexes’ declines.

📸 The big picture: Investors are facing the most aggressive tightening of US monetary policy in over two decades after the Fed raised interest rates by 0.5% this week. But Thursday’s results show traders are predicting that the central bank “will struggle to fight high inflation amid the lingering threat of a recession,” per Bloomberg.

+In the know: Higher interest rates usually lead to slower (or negative) growth for tech stocks because it reduces the value investors place on their future earnings. Generally speaking, fixed-income assets like bonds gain a boost in attractiveness compared to riskier assets like stocks.