U.S. markets drop sharply as investors are spooked by rising rates

Irving Hamilton
October 11, 2018

President Donald Trump slammed the Federal Reserve as "crazy" for its interest-rate increases this year in comments hours after the worst US stock market sell-off since February.

"I think the Fed is making a mistake", Trump told reporters as he arrived for a campaign rally ahead of the USA mid-term elections.

"The Fed has gone insane", Mr. Trump told reporters while traveling to Erie, Pennsylvania, for a campaign rally.

"Actually it's a correction that we have been waiting for, for a long time", he continued. The Fed is doing what it thinks is necessary, but I don't like what they're doing because we have inflation really checked and we have a lot of good things happening.

The tech sector was hit hardest, with Amazon, Apple, Facebook and Netflix all in the red.

"I think we don't have to go as fast", Trump reportedly said.

The president took aim at the Federal Reserve, led by Jerome Powell whom he personally chose to lead the bank, after the Dow Jones Industrial Average fell 3%, or more than 800 points, in Wednesday trading - its worst drop in eight months. The Nasdaq dropped more than 4% in the worst percentage decline since June 2016.

Higher interest rates tend to moderate economic growth and makes borrowing more expensive for the USA government as well as businesses and consumers.

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USA consumer price inflation is now above 2% and the unemployment rate is the lowest in about 40 years.

Adams said investors have concerns about their future profitability, too, making technology stocks more volatile in the last few months.

"The fundamentals and future of the USA economy remain incredibly strong", Sanders said in a statement.

The selloff came a day after the International Monetary Fund said the world economy is plateauing and cut its growth forecast for the first time in more than two years, blaming escalating trade tensions and stresses in emerging markets.

"I like low interest rates".

The Fed last raised interest rates in September and left intact its plans to steadily tighten monetary policy, as it forecast that the USA economy would enjoy at least three more years of economic growth.

Ivan Feinseth, Chief Investment Officer at Tigress Financial Partners, said that although the sell-off caught him off-guard, he thought many investors were unduly frightened by the prospect of rising rates. The problem I have is with the Fed.

As Hurricane Michael pummeled Florida, Wall Street was battered by storms as well, with the Dow shedding about 830 points, in the biggest fall since February, to close the day at 25,498.74. Tiffany plunged 10.2 percent to $110.38 and Ralph Lauren fell 8.4 percent to $116.96.

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