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Technology, retail and Powell topple Wall Street – markets in a minute

Wall Street ended the session the same way it started: in the red. The focus on investor sentiment was the drop in earnings estimates for this year by Walmart, as well as fears of a possible recession caused by further monetary policy tightening of the US Federal Reserve (Fed). Technology also helped pull the session into negative territory.

The Dow Jones Industrial Average ended the day down 0.71% to 3,1761.54 points, while the global benchmark S&P 500 fell 1.15% to 3,921.05 points. For its part, the Nasdaq Technology Index decreased by 1.87% to 11,562.58 points.

Retail pushed Wall Street into the red after Walmart cut its earnings estimates for the year as inflation continues to weigh on consumer spending. For Morgan Stanley, this is a “potential retail warning sign” — as can be read in a “research” note cited by Bloomberg.

Thus, sector stocks reacted bearishly to the announcement, with Walmart securities down 7.64%, followed by Target – which fell by 4.21%.

Pressure on the session was also the (poor) expectations of investors about the results of the technologies to be presented this week, which led to several targeted price cuts by many investment houses.

Microsoft and Alphabet – which announced results after Tuesday’s session – saw their shares fall 2.68% and 2.56%, respectively. On the other hand, the Meta Index, which admits to the market tomorrow, is down 4.50%.

Also of note is Amazon, which posted a 5.23% drop, after the company, led by Andy Gacy, announced that it would raise prices for delivery and streaming services in Europe by up to 43% this year to counter escalating costs. Price increases begin in September.

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The session also marked the start of the US Federal Reserve’s two-day monetary policy meeting. According to Bloomberg, the central bank led by Jerome Powell is expected to raise the federal funds rate by 75 basis points to a range between 2.25% and 2.5%.

The US central bank started its key interest rate hike cycle last March, with an increase of 25 basis points. At the next meeting, in May, it rose 50 basis points, and in June the rise was already 75 basis points for a range between 1.5% and 1.75%, where it is currently.

The market fears that the central bank will not be able to avoid a recession, having adopted a restrictive monetary policy, in its view, too aggressive. “[Acreditar] Seema Shah, chief strategist at Principal Global Investors, told Bloomberg that an easy landing from here seemed like a distant opportunity.

“In the last 11 cycles of monetary tightening, inflation was lower and the fed funds rate was higher at the time of take off,” the expert justified.