U.S. stock markets have experienced another brutal week. Inflation fear and soaring bond yields are some of the concerns that are trying to burst the higher stock valuation bubble. The Dow Jones Industrial Average, among two other stock indices—the S&P 500 and the Nasdaq Composite—is the only index holding on to its yearly gains. The fear is that we could see an even more intense sell-off that could crash the stock market.
The Nasdaq Composite index is facing a brutal sell-off this year, and it is down nearly -3% YTD. The index is firmly in the correction territory as it has dropped over 10% from its all-time high of 13,879—formed on April 16 this year. The fundamental factors that are causing the stock market to tank are fear of higher inflation and tech stock valuation. The reason is that dovish monetary policy and stimulus support are aiding the economic recovery process.
Traders believe that the Fed will increase the interest rate, which could hurt the economic growth as economic recovery is still fragile. Simultaneously, some speculators also hold the view that inflation is getting out of control, and soon it will pass the Fed’s comfort level. This could prompt the Fed to take appropriate action, which could include tapering the asset purchase program.
美元崩了，股市也就崩了。美元霸权，呵呵...
Someone didn’t buy the dip.