Briefing.com
4:20 pm : A day after a worsening interest rate outlook sparked a wave of profit-taking activity, such concerns returned Wednesday, giving investors another excuse to keep reining in recent market gains.
At their lows of the day, the Dow, S&P 500 and Nasdaq were down 1.2% on average. Broad-based selling activity closed all 10 sectors sharply lower. Of the 147 S&P industry groups, 139 finished in negative territory.
One reason the focus was squarely on interest rates today is that the European Central Bank raised its benchmark rate 25 basis points to 4.00%. Even though the rate hike was widely anticipated, and 4.00% is still well below the 5.25% fed funds rate in the U.S., the upward trend in rates proved bothersome.
Separately, Morgan Stanley issued a "triple sell" rating on European equities for the first time since the dotcom bust due to rising rates among other things. The investment bank said it expects a 14% correction in European equities over the next six months.
That news sent Europe's three major bourses, which recently hit multi-year highs, plunging 1.8% on average and left investors in U.S. equities also questioning valuations.
As a reminder, the Dow and S&P 500 were in record territory just two days ago, yet rising interest rates have served as an effective profit taking catalyst for the overextended market.
Today's only scheduled economic report also failed to give investors any incentive to use intraday market dips as buying opportunities.
As expected, Q1 productivity was revised lower, checking in at 1.0% (consensus 1.0%) from a previous read of 1.7%. With high levels of resource utilization still a Fed focal point as having the potential to sustain
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