Frankfurt Investors’ initially positive reaction to the sharpest US interest rate hike since 1994 is giving way to disillusionment. The leading indices fell by up to 2.7 percent when they opened on Thursday, giving up their gains from Wednesday.
About an hour into trading, the tech-heavy Nasdaq is down 3.5 percent, the S&P 500 is down 3 percent and the Dow Jones is down 2.3 percent.
“The Fed rally is fading as investors question the Fed’s ability to achieve a soft landing for the economy,” said Peter Cardillo, chief economist at investment firm Spartan. Therefore, the stock market has not bottomed out yet.
Geir Lode, head of stocks at asset manager Federated Hermes, was also pessimistic about the future prospects. “We see it increasingly likely that it will take a recession and higher unemployment to get inflation under control.”
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Against this background, investors parted with technology stocks in particular. The shares of Amazon, Apple, Netflix, Facebook operator Meta and Google parent Alphabet fell by up to 4.2 percent. According to experts, higher interest rates will devalue the future profits of these high-growth companies.
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