Wall Street faces rate shock and AI fears
The weekly stock markets closed with mixed results, as Wall Street experienced a decline in the Dow Jones by 1.7%, marking its third consecutive weekly drop, while the Nasdaq rose by 0.72% driven by strength in the technology sector. This came after the Federal Reserve raised interest rates for the first time since July 2023, increasing by 25 basis points to a range of 3.75%–4%, with expectations of further hikes before the end of 2026 due to ongoing inflation concerns. Additionally, the yield on 10-year Treasury bonds surpassed 5%, reaching its highest level since 2007, adding pressure on valuations and high price-to-earnings ratios. In Europe, indices such as DAX, CAC, and the STOXX Europe 600 declined between 0.57% and 1.40%, due to rising energy costs and inflation. Conversely, Japanese stocks gained amid easing concerns over energy disruptions, with the Nikkei 225 increasing by 1.57%. The Chinese markets were mixed: the Shanghai Composite rose by 0.61%, while both Hong Kong and the Hang Seng index declined. Bottom line: Pressure on stock markets remains high due to rising yields and interest rates, despite a recovery in the technology sector, with expectations of possible rate hikes in 2026.
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