*U.S. stocks were dominated by declines, technology stocks plummeted, and the Nasdaq fell nearly 2%
*US Treasury SecretaryYellen:To prevent the economy from overheating, or to raise interest rates
*Institutional recommendations:shift from growth sectors to cyclical stocks
On Tuesday, US stocks fell across the board, and the decline in late trading narrowed. As of the close, the Dow had turned from a decline to a rise, and closed up 19.80 points, or 0.06%, to 34,133.03 points; the Nasdaq fell 261.61 points, or 1.88%, to 13,633.50 points; the S&P 500 index fell 28.00 points, or 0.67%, to report 4164.66 points.
The technology sector plummeted, with star technology stocks and high-growth stocks generally falling. Apple fell 3.5%, Amazon fell 2.2%, Tesla fell 1.7%, Google, Facebook, and Netflix all fell more than 1%. The economic restart concept stocks suffered a sell-off, and the aviation, cruise and retail sectors generally declined.
Popular Chinese concept stocks generally fell, China Technology Index ETF fell 1.7%; NetEase Youdao fell nearly 7%, Vipshop, Zhihu, Lufax, and Wuxin Technology fell more than 5%.
U.S. Treasury Secretaryimplied“rate hike” speeches lead to market volatility
According to foreign media reports, U.S. Treasury Secretary Yellen said on Tuesday that he may”have to” raise the Interest rates to control the overheating of the economy caused by the trillion-dollar stimulus plan.
Yellen said,”In order to ensure that our economy does not overheat, interest rates may have to rise.” She believes that”even if the additional expenditure is relatively small relative to the size of the economy, it may be Leading to a modest rise in interest rates.” She also defended the stimulus plan, saying,”These are the investments the U.S. economy needs to improve competitiveness and productivity, and the economy will grow faster because of this.”
Yellen’s suggestion of raising interest rates immediately aroused The main stock index fell sharply, and the Nasdaq fell more than 400 points.
However, she later clarified that she did not intervene in the Federal Reserve action, not Forecasts are not recommendations. She respects the independence of the Federal Reserve.
Economic overheating concerns appear
The US financial media, including CNBC, use”has been on fire” to describe the current US economy. Data show that the US GDP growth rate in the first quarter was 6.4%; Goldman Sachs recently predicted that the US economy would grow at around 10.5%in the second quarter.
Since the outbreak of the new crown in March last year, United States Congress has allocated appointments The stimulus spending of US$5.3 trillion has led to a budget deficit of more than US$3 trillion in fiscal year 2020. , There will be a gap of US$1.7 trillion in the first half of fiscal 2021.
In addition, the Biden administration is promoting an infrastructure plan that may spend another 4 trillion dollars on various long-term projects. In response, Yellen said that Biden is “taking a very ambitious approach to make up for the (U.S.) lack of investment in infrastructure, R&D, and small businesses for more than a decade. This is a positive approach.”
Due to the rapid economic growth, concerns about inflation have also emerged. Previously, Fed officials promised to maintain loose policies until”substantial progress” is made in achieving full employment and an average inflation rate of 2%.
Yellen said that he is basically not worried about inflation becoming a problem. As for the outside world’s concerns about the huge US deficit, she said,”We need to pay for what we are doing,” but the government still has”reasonable fiscal space.”
Investors may wish for them
Some market analysis pointed out that after the recent rally has triggered concerns about bubbles, the mere suggestion that interest rates might be raised is enough to make investors worry about it.
Fiona Cincotta, senior financial market analyst at City Index, said that U.S. stocks have already experienced a magnificent rise in the market, and it can be seen that the upward momentum is close to exhaustion; although the corporate quarterly report is encouraging, they have not been able to. Promote the major U.S. stock indexes to continue to rise; the next recommendation is to leave growth companies and choose cyclical sectors .
BlackRock global fixed income chief investment officer Rick Rieder said that he has been discussing with customers frequently whether the US economy is overheating; the longer the easing policy lasts, the Excess liquidity in the economic system The more obvious the span>, the greater the risk of overheating the economy; if such a risk exists, then the exit from easing policies may have to be more radical.
In addition, investors are paying close attention to the global epidemic situation, especially India The worsening of the epidemic situation, because this may impact confidence in economic recovery.