The Nasdaq posted its lowest close since July 2020, as investors worried about the impact of higher interest rates and pulled out of chipmakers after the United States announced restrictions aimed at hobbling China’s semiconductor industry.
Federal Reserve Vice Chair Lael Brainard said tighter U.S. monetary policy has begun to be felt in an economy that may be slowing faster than expected, but the full brunt of Fed interest rate increases still won’t be apparent for months.
Despite growing concerns by several economists and analysts that the Fed’s interest rate hikes could increase unemployment, Chicago Fed President Charles Evans continued to back the central bank’s attempt to lower inflation, saying that while it sounds “optimistic” he believed it could do so “while also avoiding recession.”
“People are worried about the economy. People are worried about a possible recession,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.
The Philadelphia SE Semiconductor index dropped 3.5% after the Biden administration published a set of export controls on Friday, including a measure to cut China off from certain semiconductor chips made anywhere in the world with U.S. equipment. read more
Shares of Nvidia Corp fell 3.4%, while Qualcomm Inc, Micron Technology Inc, and Advanced Micro Devices also ended lower.
Investors were also cautious ahead of the U.S. third-quarter earnings season, which is set to kick off on Friday with results from some of the major banks.
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