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The strong economic data has unsettled investors, who worry that signs of an economic recovery could prompt the Federal Reserve, which is trying to tame inflation, to keep interest rates high for a long time.
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US markets have had a tough week, with the Dow Jones Industrial Average falling more than 1,000 points in the past three days alone, and the decline shows no signs of slowing.
The Dow Jones Industrial Average opened down 367 points, or 0.9%, on Thursday morning. The S&P 500 was down 0.2%, while the Nasdaq Composite Index was down 1.2%.Customer Relationship Management) Investors were worried.
Shares in the customer relationship management company fell 18% after it reported weaker-than-expected revenue and lowered its outlook for the year ahead.
This comes after a bad day on Wednesday when all 11 sectors of the S&P 500 closed lower. The Dow fell more than 300 points, mostly due to the stock price of semiconductor giant Nvidia.NVDA), and big tech stocks also fell.
This week’s decline was driven by a variety of factors, including corporate earnings and better-than-expected economic data. Bonds were particularly hit by rising inflation concerns and a weak Treasury auction on Wednesday, which pushed the 10-year Treasury yield to its highest level since late April.
Strong economic data has also spooked investors, who worry that signs of an economic recovery could prompt the Federal Reserve, which is trying to tame inflation, to keep interest rates higher for longer.
The S&P 500 has risen in 23 of the past 30 weeks, hitting its highest close since 1989, but is currently heading for a negative week.
“Stock prices have been on a relentless upward trajectory in recent weeks, but it has always been difficult to sustain,” Deutsche Bank analysts wrote Thursday. “It is clear that momentum has now turned more negative.”
New economic data released Thursday showed U.S. first-quarter gross domestic product was revised downward (to 1.3% from 1.6%) and consumer spending slowed, a sign that the economic expansion is slowing but which some analysts see as a double-edged sword.
“While this data may be cause for concern for corporate and stock market investors, slowing consumer spending and economic growth may be just the news needed to keep inflation declining and prompt the Fed to eventually cut interest rates,” Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, wrote Thursday.
Meanwhile, attention is focused on the April personal consumption expenditures index (an inflation indicator important to the Fed) to be released on Friday.
This story is developing and will be updated.
