U.S. stocks fell sharply on Wednesday as mass sales returned to the technology sector amid a fall in cryptocurrencies.
The Dow Jones industry average fell 460 points, while the S&P 500 fell 1.4%. The technically heavy Nasdaq Composite slipped 1.5%, while Microsoft, Facebook, Alphabet and Apple all crossed more than 1%
Sentiment in the technology sector has dampened the decline in cryptocurrencies, including bitcoin. According to Coin Metrics, the world’s largest digital token fell 30% at its lowest session level, to just over $ 30,000. Bitcoin has halved since it peaked above $ 64,000 in mid-April. On Tuesday, China warned financial institutions not to run crypto-related businesses, which could trigger a sell-off.
Tesla, the big owner of bitcoin, declined 4%. Microstrategy, another company that bought a large amount of bitcoin for its corporate treasury, is reserved for 10%. Coinbase, a new public crypto exchange, has fallen by almost 10%.
“There is no doubt that bitcoin is a poster for widespread market speculation and risk appetite,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “Therefore, it should be absolutely monitored in measuring the risk-taking pulse, and now the risk aversion.”
Growth stocks have been under pressure lately as the Nasdaq Composite fell nearly 5% in May as fears of inflation intensified. The steady rise in price pressures could expose the Federal Reserve’s flexible policies, which could hurt technology companies that have relied on light lending costs for years for superior growth.
The main fund Cathie Wood Ark Innovation ETF (ARKK) fell more than 4%, bringing its losses in 2021 to more than 18%.
The Fed is releasing minutes from a meeting in April later Wednesday afternoon, which could increase nervousness over inflation. The Fed maintained an easy policy at the meeting, but acknowledged that inflation could rise in the coming months. The central bank holds that these price pressures will be temporary.
“The main question for markets right now is whether the Fed is right and whether this increase in inflation is only temporary, because if inflation is not temporary, it could trigger a very painful period for almost all investors,” Tom Essaye, founder of Sevens Report, said in a note .
Helping the feeling on Wednesday was better than Target’s expected results. Shares of the big trader jumped 3.8% after him he said sales rose 23% last quarter.
The main stock indices arose from losses measured by weaknesses in the technology sector. Data on soft housing on Tuesday partially triggered wide sales in the previous session.
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