Stock Indices Fall as White House Restricts US Exports to China

By: Miguel A. Rodriguez

11:17, 11 October 2022

Investment banks like Goldman Sachs expect the Fed to raise 75 bps in November, 50 bps in December, and 25 bps in February to reach a final interest rate of 4.5–4.75%.

The market behaved somewhat more volatile and without direction yesterday, mainly because it was a holiday in the United States and the bond market was closed. 

The Wall St. indexes started the session lower, weighed down by a drop in technology stocks following the White House's announcement of new export restrictions on US companies that sell semiconductor chips and other chip-making equipment to China. 

New US export control restructuring aimed at halting Beijing's chip-making capabilities that could enhance its military capabilities sent chipmaker shares down about 4%, a sector that remains under pressure amid fears of another 75-basis point rate hike by the Federal Reserve next month. 

Investment banks like Goldman Sachs expect the Fed to raise 75 bps in November, 50 bps in December, and 25 bps in February to reach a final interest rate of 4.5–4.75%. In any case, this is roughly what the market is already discounting. 

This is despite Fed Vice President Brainard's remarks on Monday that a second-half GDP rebound will be limited and that real GDP growth will be essentially flat this year. 

Slowing growth, however, does not appear to be deterring the Fed from maintaining its monetary policy. Other economists argue that the Federal Reserve's rate hikes and, in general, tightening of monetary policy have already begun to affect the economy and that the real results will be visible in the coming months, so the Fed risks overreacting if it maintains the pace of rate hikes in upcoming meetings. 

The indices trimmed losses at the session's close to end, nearly unchanged from Friday's close in the case of the DowJones30 and S&P500, with only the technological Nasdaq experiencing a moderate drop of around 0.40%. 

Gráfico, HistogramaDescripción generada automáticamente

Sources: Bloomberg, Reuters 

Share this article

This information prepared by is not an offer or a solicitation for the purpose of purchase or sale of any financial products referred to herein or to enter into any legal relations, nor an advice or a recommendation with respect to such financial products.This information is prepared for general circulation. It does not regard to the specific investment objectives, financial situation, or the particular needs of any recipient.You should independently evaluate each financial product and consider the suitability of such a financial product, by taking into account your specific investment objectives, financial situation, or particular needs, and by consulting an independent financial adviser as needed, before dealing in any financial products mentioned in this document.This information may not be published, circulated, reproduced, or distributed in whole or in part to any other person without the Company’s prior written consent.
Past performance is not always indicative of likely or future performance. Any views or opinions presented are solely those of the author and do not necessarily represent those of Financial Services (Pty) Ltd trading as CAPEX.COM/ZA acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via CAPEX.COM/ZA, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15.  Magnasale Trading Ltd is the principal to the CFD purchased by investors.