Investors fear damage to U.S. companies after 4% plunge on Wall Street

Prices on the New York Stock Exchange continue to fall after six weeks of declines in the market, which has caused concern about the effects this could have on companies.

So far in 2022, the Nasdaq has fallen 27%; the S&P 500, 17%, and the Dow Jones, 13%, making it one of the worst starts to the year since the 1929 crisis.

At the close, Wall Street indexes reported the sharpest declines in two years, with the technological Nasdaq down 4.7%, the S&P 500, 4%, and the Dow Jones Industrials, 3.6%.

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While technologies were falling, gains in other sectors were being offset. The chip manufacturer Nvidia lost 1.1% and technology companies had a great influence on the market’s direction due to their large size.

As investors worried about inflation and high interest rates, the sector became a drag on the stock market. Retail chains were also down; Amazon gave up 1.3% and Starbucks declined 2.9%.

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At the same time, energy and health sector companies reflected a solid rise; Chevron increased 2.7% and Eli Lilly advanced 3.6%.

Spirit Airlines rose 12.4% following JetBlue’s proposed purchase. The U.S. Treasury suffered a 2.94% decline to 2.89% yield on its bonds.

ManTech, a defense company, increased 14.9% following a buyout attempt by investment firm Carlyle Group.

U.S. crude oil prices rose by 1.6% and year-to-date are up more than 50%. Natural gas prices rose 1.5% and have doubled so far in 2022.

Why is Wall Street plummeting?

Stock traders anticipated an economic slowdown and credit restrictions due to a rate hike to control inflation.

Prices are rising rapidly around the world, forcing central banks to raise interest rates, even though this could have an impact on GDP.

This was compounded by other problems such as the 9% rise in consumer prices in the United Kingdom and the similar escalation in Canada.

The report from the U.S. Department of Commerce reported that the U.S. recorded an annual inflation rate of 8.3% – at its highest since 1982, as well as British inflation – thanks to the increase in energy bills, and prices in Canada rose by 6.8% last month, largely due to the increase in food and housing prices, according to Statistics Canada data.

Adding to these inflation-triggered problems were Target Corporation’s results, which reported quarterly earnings that reflected a reduction of half the normal price, causing fuel and freight costs to rise.

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For this reason, Target shares plummeted 24.9%, and a day later Walmart warned that it was going to have the same difficulties in its profit margins.

The Walton family reeled financially, plummeting its fortune nearly $19 billion after Walmart Inc. made the earnings forecast cut. It is considered the worst single-day drop in family fortunes since 1987.

Not any analyst is willing to predict yet the end of the sales wave after a strong first five months of 2022 for risk assets, taking into account the great uncertainty the world is experiencing in macroeconomic terms.

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