- Stock losses were driven by technology businesses, despite broad calls from Federal Reserve officials to hike interest rates to prevent inflation from taking hold in the US economy.
- Traders also weighed down on the news that a divided Supreme Court had struck down the cornerstone of Biden's vaccination programme, rejecting a rule that would have required 80 million workers to get vaccines or undergo periodic tests.
- Losses in Microsoft and Tesla plummeted the Nasdaq 100 by more than 2.5%.
- Officials could raise rates as early as March, according to Fed's Brainard, in order to bring generation-high pricing pressures under control. Fed's Harker, favours a March start and three or four hikes in 2022.
- Fed's Evans expects a similar amount of raises this year, and stated he couldn't predict if the first raise will occur in the next two months. If circumstances allow, Fed's Barkin believes authorities will be able to begin normalising rates at their March meeting.
- Rising rates, an upshot of strong economic growth, may well drive investors toward value equities, which tend to be more cyclical and offer near-term cash flows. As a result, there are no buyers for growth stocks. With rising inflation, the long-term earnings potential of the relatively expensive technology companies may become less tempting.
- In December, prices paid to US producers slowed as two important drivers of inflation in 2021, food and energy, fell from a month earlier, signalling a break in the previous trend of large increases. At the same time, producers faced a slew of material shortages, labour constraints, and transportation bottlenecks that drove up prices last year.
