The Dow Jones Industrial Average experienced another decline today (4/2), causing Wall Street to enter a slump in the new quarter. According to CNBC, the main reason for this is the rise in US bond yields, with the 10-year bond yield reaching its highest level since November 28th of last year. Oil prices have also reached a five-month high, exacerbating inflationary pressures. In addition, hopes for a rate cut by the Federal Reserve in June have diminished, leading to a two-day consecutive decline in the Dow Jones Industrial Average.
On the other hand, the cryptocurrency market has also been severely affected, with Bitcoin falling more than 7% and Ethereum falling more than 9%.
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The recovery of the US manufacturing industry affects rate cut expectations, and Bitcoin dropped to 68K at one point.
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Rising yields and inflation concerns hit the market
Tech stocks suffer, Tesla’s Q1 delivery rate down 8.5% from last year
Remaining optimistic?
The turbulence at the beginning of Q2 can be attributed to the continued rise in inflation data and some unexpected strong economic data, which together have driven up yields and reduced the possibility of future rate cuts by the Federal Reserve.
Tech companies have felt significant selling pressure. Tesla’s first-quarter delivery volume was lower than expected, causing its stock to fall by 5.5%. Other tech giants such as Nvidia, Alphabet, and Microsoft also recorded declines of around 1%.
Despite recent setbacks in the market, some analysts remain optimistic. They view the selling pressure as a “natural digestion” period after the rapid rise in stock prices. They see potential in the market, particularly in areas outside of technology such as energy.
As Q2 progresses, the focus remains on whether the Federal Reserve will decide to maintain its current rate stance and whether the momentum can be sustained into early 2024. Investors and traders are adjusting their strategies to adapt to evolving economic conditions, particularly focusing on inflation, oil prices, and the next steps of central banks.
Yields
Bitcoin
US bonds
US stocks
Further reading
US stocks reach new highs, Bitcoin rebounds from bottom, breaks through the 43K resistance line
Bitcoin falls to 41K, down 15% since the launch of ETF, support seen at 38K