With Europe also struggling to contain inflation that has been driven up by energy prices, “this could be a serious problem for the eurozone economy,” said Fiona Cincotta, a analyst at City Index in London, said.
Frequently asked questions about inflation
What is inflation? Inflation is a Loss of purchasing power over time, which means your dollar won’t go as far tomorrow as it did today. It is usually expressed as an annual change in prices for everyday goods and services such as food, furniture, clothing, transportation, and toys.
The Stoxx Europe 600 index and the DAX index in Germany both fell 3.8% on Monday.
The sudden drop in stock prices this month, followed by a relentless rally began to upset some investors. S&P 500 up 27% in 2021 – its third straight year of gains – and even after falling so far in January, the stock index is still double where it stood at its March 2020 low, before the Fed first stepped in. to strengthen the economy.
That increase continued late last year even as food and gas prices rose at rates not seen in years, along with wages, and despite the rise of the coronavirus pandemic. Speculators have also turned to investments as diverse as cryptocurrencies, real estate and even trading cards and other collectibles, which has alarmed many when they see signs for I see investors getting carried away.
A slip in prices helps remove some of that excess that is long overdue, many market watchers say.
“We haven’t had a correction in a long time,” said Lindsey Bell, chief market and currency strategist at Ally Invest. “While this sell-off over the past few weeks feels uncomfortable, the good news is, the sooner you have a sell-off or correction like we’re seeing today, the more likely you are to generate that. lose land before the end of the year”.
That’s not to say it won’t be a bumpy year for stock investors. Corporate earnings growth is likely to slow, especially in big tech stocks, and many companies backed by investors during the pandemic, like Peloton and Netflix, have tumbled as Back to normal means they lose motivation with new customers.
But some investors fear that even the biggest tech companies could falter, something that would be exacerbated if interest rates rose – forcing them to spend more of their profits on debt and It is also difficult to achieve the high growth expectations of investors. .
Technology shares, which have been leading the market’s decline this year, were also stymied on Monday: The tech-heavy Nasdaq composite fell about 5%, before rebounding later in the day with a high. about 0.6% increase. Nasdaq broke through a correction last week and is now down 13.7% from its high.
https://www.nytimes.com/2022/01/24/business/economy/us-stock-market-correction-territory.html S&P 500 rally after hitting correction territory, the day’s losses erased