Wall Street Retreat Worsens As Fed Signals Higher Interest Rate

As stock trading screens turned red again on January 25, one trader was heard to quip that at least some things are falling in price. The day’s fall in share prices took the cumulative loss on the S&P 500 index towards 10% for this year already, only three weeks in.

Photo Insert: Even though the economy is in good shape — unemployment is very low and wages are rising — Wall Street energy has a way of infecting Main Street.

The year-to-date decline in the NASDAQ composite, a tech-heavy index, is well into the double digits. It has been a rotten start to 2022 for stock investors. And the day-to-day numbers for the broad indices do not even do full justice to the turmoil in the markets, the Economist reported.

The primary cause of the market jitters lies with the Federal Reserve, which is meeting this week and widely expected to begin raising interest rates in March to try to rein in inflation.

The Fed’s tone has turned decidedly more hawkish, which has investors on edge about how aggressively the Fed will raise rates, Allison Morrow reported for CNN Business late on Jan. 25. The easy money season is drawing to a close, rattling investors.

Even though the economy is in good shape — unemployment is very low and wages are rising — Wall Street energy has a way of infecting Main Street.

Turmoil in financial markets could spill over into the real economy, erasing trillions of dollars in household wealth, as Matt Egan of CNN warned. Steep losses on Wall Street could rattle already shaky consumer confidence.

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