Nasdaq falls to 2-year low as US stocks plummet over hawkish Fed remarks

ANKARA

The Nasdaq index fell to its lowest level in two years at Monday's closing as US stocks plummeted with hawkish comments from Federal Reserve officials.

The Nasdaq dove 110 points, or 1.04%, to close at 10,542. It was down as much as 1.8% during trading hours, touching 10,449 points – its lowest since September 2020. The tech-heavy index has lost over 32% so far this year.

The Dow Jones lost 93 points, or 0.32%, to end the day at 29,202. The S&P 500 declined 27 points, or 0.75%, to 3,612.

The selloff in US markets continued as Charles Evans, president of the Federal Reserve Bank of Chicago, said earlier that he expects interest rates to rise to 4.5% in early 2023 to tame record inflation.

While the federal funds rate is in the 3.00%-3.25% range, the Fed is expected to make a total of 100 to 125 basis points of rate increases before the end of this year, according to Evans.

Lael Brainard, the Fed vice chair, also said earlier that the effect of interest rate hikes on high inflation may take longer than anticipated.

"We are starting to see the effects in some areas, but it will take some time for the cumulative tightening to transmit throughout the economy and to bring inflation down," she said.

The VIX volatility index, also known as the fear index, jumped 3.4% to 32.44. The 10-year US Treasury yield was flat at 3.888%.

The dollar index rose 0.31% to 113.14, hovering near its highest level in 20 years, while the euro fell 0.47% to $0.9705 against the greenback.

Precious metals were on the decline, with gold falling 1.6% to $1,668, and silver plummeting 2.6% to $19.62.

Oil prices reversed course and gave up earlier gains with worries of weak demand due to global recession fears. Global oil benchmark Brent crude traded at $95.80 per barrel for a 2.2% loss. US benchmark West Texas Intermediate was around $90.78 – down 2%.

The World Bank and IMF chiefs warned earlier that the risk of recession in the global economy is growing due to rising interest rates and slowing economies around the world.