Worst day of 2023 suffered by Wall Street on interest rate concerns

Wall Street suffered from its worst performance of the year on Tuesday, with the main indexes closing down as investors interpreted the recent rebound in US business activity in Feb. as signaling interest rates will need to stay higher for longer to combat inflation.

As for the S&P 500 and Nasdaq Composite, it was their third session in a row closing lower, while the decline in the Dow Jones Industrial (.DJI) wiped out its gains for 2023. The retreating performance came after the S&P Global Purchasing Manufacturer’s index, which reflects business activity in the United States, returned to expansion for the first time in eight months in February. The 50.2 reading, up from 46.8 in January, was buoyed by a robust services sector, according to a survey.

The data added to recent economic data which painted a picture of a resilient economy continuing to perform against the background of multiple rate-rises by the central bank in 2022 to cool down inflation in the United States.