Wall Street markets tumble as Yellen hints at rise in interest rates

3 minutes
Wall Street markets tumble as Yellen hints at rise in interest rates

- Volatility gripped financial markets as a selloff in some of the world's largest technology companies dragged down stocks.

Typically, shares such as Apple Inc. and Amazon.com Inc. sank the Nasdaq 100 while the S&P 500 pared losses amid a rebound in commodity stock, financial and industrial sectors.The dollar advanced after Treasury Secretary Janet Yellen said that the interest rates may have to rise modestly to prevent U.S. economy from overheating.

Her remarks added to the debate on whether government spending could spark a spike in inflation, when prices have reached the highest level in two decades.Hedge funds have been bailing on equity at a pace not seen since the financial crisis, while shares have continued to gain traction despite blowout profits.And the mere suggestion that the Federal Reserve would have to reduce rates from near zero was enough for investors to head into the exits after the latest market rally sparked a flood of bubble speculation.

''It seems we've had this spectacular run-up and I think we've seen momentum just run out of steam," said Fiona Cincotta, senior financial analyst at City Index.Despite their earnings they haven't managed to push these indices higher.Moving out of growth and into cyclicals is the place we will have more movement.

An announcement of a sharp decline in equity futures had traders scrambling for explanations earlier Tuesday.Some speculated on financial tensions between China and Taiwan, Singapore's stiffer coronavirus surveillance and Ferrari NV's decision to postpone military targets.

Investors also followed the latest economic readings, with the U.S. trade deficit shrinking in March to a new record.Meanwhile, a senior White House economic adviser demurred on the question of whether President Jerome Powell will nominate Fed Chair Joe Biden for a second four-year term, which was that the decision on selecting the next chief of central banks would come after a thorough 'process.

Here are some of the best events to be watch this week:

U.S. ADP job changes are due WednesdayChicago Fed President Charles Evans gives a virtual speech at an event hosted by Bard College on Wednesday.The Cleveland Fed President Loretta Mester gives a virtual speech of the Bank of England on ThursdayThe April U.S. unemployment report is released on Friday

These are some of the main moves in markets:

The Dow Jones Industrial Average fell 0.9% as of 3:36 p.m. New York timeThe Nasdaq 100 is down 2.1%

The Bloomberg Dollar Spot Index fell 0.3%. Euro dropped 0.4% to $1.2013 The Japanese yen fell 0.2% to 109.33 per dollar

The yield on Germany's 10-year bond was little changed at 1.59% Britain's 10-year bond declined three basis points to 0.24% Italy's 10-year yield five basis points to 0.79%

Brent crude fell to 66 a barrel at West Texas Intermediate, an ounce of Gold futures fell 0.9% to $1,776 an ounce.

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