US stocks suffer worst month since 2008 financial crisis

New York - January 22 ANI Sputnik US stocks went for their worst month since the 2008 financial crisis, as Wall Street was stricken by a multi-week loss triggered by worries of interest rate hikes to clamp down on inflation.

The tech-laced Nasdaq index, the darling of investors after the coronavirus outbreak confined Americans to their homes and relied on video streaming and gadgets for work, is down 11% for the month of January. That is more than the 10% loss it took in March 2020 at the beginning of the COVID 19 epidemic and the most since October 2008 when the financial crisis broke out.

The S&P 500 index, representing the top 500 US stocks, is down 8% for January, compared to its previous month's loss of almost 13% in March 2020.

The Dow Jones Industrial Average, representing stocks across the US industry, is down 6% for January, its most since the 14% drop in March 2020.

Ed Moya, analyst at online trading platform OANDA said that Wall Street has gone from debating how aggressive one should rotate out of tech into cyclicals. It seems that every day traders are reminded that inflationary pressures are not going away soon and could prompt the Fed to become too aggressive in tightening monetary policy. Moya said that investors are concerned that profit growth expectations may have been too optimistic and underpriced in the ballooning labor costs. He said that geopolitical risks are adding fuel to the selling pressure.

The Federal Reserve slashed US interest rates to almost zero after the outbreak of the COVID 19 crisis, and has kept them there since aid recovery.

The US Consumer Price Index was grew by 7% in the year to December, growing at its fastest rate since 1982, after trillions of dollars of relief spending by the government, higher wage payouts by companies and supply chain disruptions caused by the Pandemic. The Federal Reserve says it may have to execute a series of interest rate hikes to counter such inflation.