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Recession Fears Return to Wall Street After Fed Rate Hike

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The stock markets in New York lost a lot of ground on Thursday. After the initial relief that the US Federal Reserve will tackle high inflation with a sharp rate hike on Wednesday, recession fears returned to the markets. Higher interest rates fight inflation, but they also curb economic growth.

 

The British central bank also raised interest rates on Thursday to curb inflation. which has risen to the highest level in forty years in the United Kingdom. It was the fifth consecutive interest rate hike by the Bank of England. The central bank of Switzerland also surprised the markets with an unexpected interest rate hike of half a percentage point.

Shortly after opening, the Dow-Jones index was 1.9 percent lower at 30,089.41 points. The broad S&P 500 fell 2.3 percent to 3705.48 points and tech gauge Nasdaq lost 2.5 percent to 10,824.96 points.

Twitter won 1.6 percent. The employees of the social media company will talk for the first time on Thursday with Elon Musk, who wants to take over Twitter for $ 44 billion. According to the business newspaper The Wall Street Journal, the Tesla CEO will confirm that he wants to buy the company.

Tesla fell 3.8 percent. According to the Reuters news agency, the automaker has increased the prices of its models in the US market due to rising material costs and supply chain problems.

McDonald’s was down 1.2 percent. The group has reached a settlement of 1.25 billion euros in France with prosecutors who accuse the fast food chain of tax evasion. This brings an end to years of investigation into controversial money flows to Luxembourg and Switzerland. Despite the deal, which was approved by a judge on Thursday, McDonald’s pleads no guilt.

Trading in Revlon stock has been halted. The cosmetics company has applied for a postponement of payment. The company says it is no longer able to meet its debt payments due to supply chain problems and high inflation. During the corona pandemic, Revlon suffered from many working from home and the closing of entertainment venues and the catering industry. As a result, the company sold less makeup.

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