Stocks dropped sharply Wednesday with tech shares leading markets lower on worries about higher inflation and as cryptocurrencies prices plunged.
A steep fall in Bitcoin to below $30,000 was denting sentiment in the tech sector and pulling crypto-linked stocks lower. Cryptocurrency exchange Coinbase Global dropped nearly 9%.
The Dow Jones Industrial Average fell 520 points, or 1.53%, to 33,539, the S&P 500 declined 1.5% and the Nasdaq sank 1.42%.
The anxiety over rising price pressures either will be eased or heightened by the release Wednesday of the minutes from the latest Federal Reserve meeting. Any hint of a crack in the central bank’s view that price increases will be “transitory” could trigger a sharp reaction in both equity and fixed income markets.
The Fed has maintained the stance that a jump in inflation only will be temporary as the U.S. economy reopens. Investors will be monitoring the minutes to determine the central bank’s thoughts on price pressures and hints on when it might begin pulling back support.
Technology shares have been leading the Wall Street declines since the pricey growth stocks suffer the most from higher interest rates.
Stocks finished lower Tuesday as tech stocks were sold off during the late afternoon. The three benchmark stock indexes fell for a second straight day.
Bitcoin prices slumped to the lowest since January, while cryptocurrency peers such as Ethereum and Dogecoin traded heavily in the red, following a renewed crackdown on virtual currencies markets in China and a broader pullback in risk markets in the United States.
Bitcoin’s decline was sparked by a post on the official WeChat account of the People’s Bank of China which warned that digital tokens should not be used in either financial markets of the world’s second-largest economy – and the largest crypto market – given that they are not “real currencies.”
Bitcoin has given up all the gains it made following Tesla’s
announcement on Feb. 8 that it had purchased $1.5 billion of the digital asset. Part of the reason is Elon Musk’s surprise statement earlier this month that his company would no longer accept payments in Bitcoin.
As for Tesla, shares fell 4.63% on Wednesday after a report said new registrations in China for its electric vehicles took a sharp downturn last month, raising concerns that the world’s biggest EV maker may be losing its grip in the world’s biggest market for battery-powered cars.
Target posted stronger-than-expected first-quarter earnings and said profit margins likely will improve over the rest of the year as the country exits the coronavirus pandemic and shoppers are powered by trillions in government stimulus.
Lowe’s posted stronger-than-expected first-quarter earnings, following on the heels of larger rival Home Depot HD, as government stimulus and home improvement demand boosted the company’s top and bottom lines.
This article was originally published by TheStreet.