The tech-heavy Nasdaq sank as heavyweights like Apple Inc and Amazon.com Inc fell.
At a conference on Tuesday, Brainard said he expects methodical interest rate hikes and rapid drawdowns from the Fed’s asset portfolio to bring US monetary policy to a “more neutral stance” later this year, with “further tightening to follow.” , as necessary”.
Brainard’s comments “revealed that the Fed is willing to be more aggressive,” said Kristina Hooper, chief global markets strategist at Invesco.
“That is certainly having a negative effect on equities due to concerns that this will increase the likelihood of a recession,” Hooper said. “It’s going to get harder and harder for the Fed to engineer a soft landing the more aggressive it gets.”
At the same time, US Treasury yields jumped to multi-year highs after Brainard’s comments.
The prospect of a more aggressive Fed led to a difficult start to the year for equities, and in particular for technology and growth stockswhose valuations will be further pressured by rising bond yields.
The attention on the Fed will continue on Wednesday, when the central bank publishes the minutes of its March meeting.
Source: Ambito
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