The market had eagerly awaited Fed Testimony before Congress on Tuesday as investors wanted clarity on rising inflation concerns, but it appears investors didn’t take the ‘sit and wait’ approach. A bearish surge in overnight trading and on open primarily in tech stocks weighed the market down. Inflation concerns are driving this slump as many tech companies are dependent on cash flows. Tech concentrated index NASDAQ already had a hard Monday down 2.5% but fell off another 1.8% on Tuesday. What would normally be a bullish sign for markets appears very bearish as Powell tells congress inflation is soft and the Fed remains on track to hit its target. Treasury yields have been on the rise as the markets are in lockstep with the Fed, hitting an annual high of 1.39%. Powell says that it will move patiently and slowly telegraphing its moves amid inflation pressures.
FINSUM + Magnifi: Inflation hawks have been crying wolf for nearly a decade, but this time they might be right. The bond market is showing the early signals of inflation and further bearish behavior in the tech sector and cash-dependent industries may follow. That said, tech companies’ underlying businesses look strong, which means earnings releases might combat some of this macro bearishness.
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