US stocks fall after Federal President suggests higher interest rates needed to fight inflation

New York: Fears of aggressive interest rate hikes by a Federal Reserve keen to break the back of the worst US inflation in 40 years have led to an exodus of investors from equities and even safe-haven assets like gold, as that Wall Street was collapsing for the third week in a row.

The S&P 500, Dow Jones Industrial Average and Nasdaq Composite all ended Friday’s trade down an average of 2.7%. Their average weekly loss was 2.8%, adding to a net loss of 2.6% over the previous two weeks.

The Federal Reserve is planning one of its most aggressive monetary tightenings yet to curb price pressures that have raged since the outbreak of the Russia-Ukraine conflict, which has reduced global supplies of oil, grains and special metals. Stocks trended lower for most of April.

The sell-off on Wall Street intensified this week after a number of Federal Reserve officials, including James Bullard and Mary Daly, the heads of the central bank’s St. Louis and San Francisco divisions, suggested that a 50 basis point, or half-percentage point, hike will be implemented at the central bank’s next policy meeting on May 4-5. In its previous interest rate hike in March, the Federal Reserve only approved an increase of 25 basis points, or a quarter of a point.

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Leslie M. Gill