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Thursday, Jun 11, 2026

US stocks whiplashed for second day as volatility grips markets

US stocks whiplashed for second day as volatility grips markets

United States shares were whipsawed again on Tuesday as investors await the Fed’s decision on Wednesday.

Wall Street investors may be in need of a neck brace, as nervousness over looming United States interest rate hikes saw share prices whiplashed for a second day running on Tuesday.

A selloff sent the Dow Jones Industrial Average down more than 800 points earlier in the session, but by afternoon trading in New York, it had pared the bulk of those losses.

The session ended with the blue-chip index losing 66.77 points, or 0.19 percent, to close at 34,275.49.

The broader S&P 500 index – a proxy for the health of retirement and college savings accounts – also clawed back from an earlier bruising but closed down 53.70 points, or 1.22 percent, at 4,356.43.

The Nasdaq Composite Index lost 315.83 points, or 2.28 percent, to close at 13,539.30 despite upbeat earnings results and forecasts from IBM and Verizon.

Stocks fell sharply on Monday before staging a major turnaround, with the Dow and S&P finishing in positive territory.

But volatility continues to rule trading as investors prepare for the Fed to hike interest rates.

The US Federal Reserve kicked off its first two-day policy-setting meeting of the year on Tuesday. In December, the Fed signalled it could raise interest rates at least three times this year to rein in soaring inflation that is running near a 40-year high. And some Wall Street analysts see the Fed hiking rates four times this year.

Higher interest rates raise the cost of borrowing – a negative for growth stocks that were the darlings of the coronavirus pandemic.

Markets are also in the midst of digesting a steady stream of fourth-quarter earnings with giants like Tesla and Apple due to report this week.

The Nasdaq could use a pick-me-up after confirming a correction last week. (A correction is confirmed when an index closes 10 percent or more lower than its record closing level.)

Crypto crash


Cryptocurrencies from Bitcoin to Ether have plunged in recent weeks, erasing over $1 trillion from their market value since the start of 2022.

The world’s largest cryptocurrency, Bitcoin, has fallen 50 percent from its November high of $69,000.

Ether, the coin of the Ethereum network and the world’s second most valuable cryptocurrency, has also taken a hit, dipping below $2,200 on Monday morning. Either hit an all-time high of $4,891 in November.

IMF downgrades growth


The International Monetary Fund on Tuesday downgraded its global growth forecast by a half percentage point for 2022, citing downgrades to the outlook for China and the US.

The fund cut its forecast for US growth by 1.2 percentage points, citing the stalemate over the passage of President Joe Biden’s Build Back Better spending plan, the Federal Reserve’s unwinding of pandemic stimulus measures, and continuing supply shortages that are driving inflation.

Many Wall Street analysts see price pressures and ongoing worker shortages as a headwind to the world’s largest economy.

“The US economy will be hindered by persistent labour shortages and reduced policy support,” the Global Economics Team at Capital Economics wrote in a note on Tuesday morning.

“While headline inflation is very likely to fall, we expect core inflation to remain elevated across the developed world as shortages persist and wage growth picks up.”

Consumer confidence takes a hit


US consumer confidence took a hit in January, following gains in the last quarter of 2021. Both confidence and spending may continue to be shaky due to rising prices and the lingering effects of the pandemic.

“Expectations about short-term growth prospects weakened, pointing to a likely moderation in growth during the first quarter of 2022,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a press release.

US consumer confidence took a hit in January, following gains in the last quarter of 2021


But the proportion of Americans planning to buy a house, car or major appliances has still increased in the last six months. Consumers are less concerned with inflation than they were at the end of 2021. But in the grand scheme, that may mean very little as Americans’ concerns hit a 13-year high in November 2021.

Turbulent start to 2022


US equities have had a rough start to the new year. The S&P 500 is now down 10.4 percent from its record closing high on January 3. The tech-heavy Nasdaq has tracked its worst start to the year since 1980.

Beyond Fed rate hikes and inflation, investors are also growing cautious in the face of mounting tensions between Washington and Moscow over the Russia-Ukraine crisis.

On Monday, the US Department of Defense placed some 8,500 American troops on heightened alert to be deployed to Eastern Europe as reinforcements for the North Atlantic Treaty Organization.

Earnings season


Investors will also be eyeballing earnings this week when some mega-cap companies report their fourth-quarter earnings.

IBM, which reported on Monday, beat revenue and profit estimates on strong demand in its software unit. Shares rose 3.43 percent as of Tuesday afternoon.

Shares of General Electric Co fell 6.72 percent after the industrial conglomerate missed sales expectations as it struggled with supply-chain constraints.

American Express jumped 6.77 percent after it raised forecasts for revenue and profits after spending on its credit cards grew to a record.

Verizon Communications leaped past estimates for subscriber growth and gave a full-year earnings forecast that exceeded expectations.

Microsoft will report after market close today followed by Apple and Tesla later this week.

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