All three major indexes experience major selloffs resulting from fear of inflation and its effect to the US economy. That fear was assuaged by Federal Reserve Chair Jerome Powell stating that inflation was well within the control of the Federal Reserve. Fund manager sold mainly US Tech stocks with many indicating that stock prices have been too high recently, a sign of frothiness in the market.
The Crypto market however was down 15% and is yet to recover. Wedbush analyst also warned that Tesla’s valuation could be tied to Bitcoin’s price after Elon Musk actively supported the currency by having Tesla buy Bitcoin to be used as a payment method on the Tesla platform.
A correction like this is typically healthy in the market. It is a sign that investors are getting more cautious or smart depending on who you ask. The US Federal Reserve is playing a major role not only in domestic US markets but on the international level as well, as the sell offs started due to concerns in Asia.
It brings about the question of free markets – can the world’s stock markets survive without Federal Reserve intervention?