Wall Street saw a significant decline in stock prices as it became increasingly clear that the US central bank would continue to raise interest rates, given that the US labor market remains strong.
The Dow Jones lost 1.26 percent of its value on Thursday, currently at 33,696 points, while the S&P 500 slipped 1.38 percent to 4,090 points, and the Nasdaq index 1.78 percent to 11,855 points.
Stock indexes have been under pressure since it was announced that in January, producer prices in the US rose 0.7 percent every month, which is their biggest increase in the last seven months and well above the expected 0.4 percent.
The US also reported that the number of initial jobless claims unexpectedly fell last week, showing that the labor market remains strong.
Both data indicate that inflationary pressures could remain elevated longer than the market expected. Therefore, analysts estimate that the Fed will increase interest rates two more times, in the range of five to 5.25 percent.
After these data, it seems the Fed will continue to raise interest rates. Some people think 0.5 percentage points could happen next session.
Fed will raise interest rates
Since the beginning of the year, stock prices have risen strongly as investors hoped that the Fed could end its rate-hiking cycle with the key interest rate below five percent and that at the end of this year, when inflation subsides, it could begin a rate-cutting cycle.
However, the latest data indicates that the Fed will likely raise interest rates above five percent and hold them at those levels until next year.
Furthermore, on European stock exchanges, share prices rose. The London FTSE index is higher by 0.18 percent, at 8,012 points, while the Frankfurt DAX rose by 0.18 percent, to 15,553 points, and the Paris CAC by 0.89 percent, to 7,366 points.