Global stocks fell and cryptocurrencies plunged further on Wednesday as a threat of unwanted inflation drove investors away from assets deemed vulnerable to any removal of monetary stimulus.
In the United States, the Dow Jones Industrial Average on Wall Street, 0.74%, at 33,808.49 units; while the S&P 500 index fell 0.51%, to 4,107.40 units; and the Nasdaq Composite Index lost 0.17% to 13,282.04 points.
The dollar traded near its lowest levels of the year against other currencies although it later reversed the trend as traders were cautious about inflation while waiting for the Federal Reserve minutes.
Equity investors are concerned that inflationary pressures evidenced in higher-than-expected readings of consumer prices. This could force the Fed to start withdrawing its monetary stimulus earlier than anticipated.
“There is no question that inflation concerns have spooked investors, which will weigh on tech stocks, and in all likelihood, bond yields will rise,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab in Austin, Texas.
Among the most volatile trades, bitcoin and ether were plummeting, with the top cryptocurrency falling to a January floor. BTC drops 10.61% and is trading at $ 38,750.9.
“The image of the bitcoin flow continues to deteriorate and points to a continued decline in institutional investors,” JPMorgan analysts wrote in a research note.
On the other hand, the European stock index STOXX 600 lost 1.2% , while the global measurement of MSCI indicators had cut losses to operate almost stable compared to the previous day.
The head of the European Central Bank, Christine Lagarde, said Tuesday that it was “essential that monetary and fiscal support is not withdrawn too soon.”
Amid that outlook, chip stocks came under pressure, with ASM International, ASML and Infineon Technologies falling more than 2% on concerns about a global semiconductor shortage.