U.S. President Donald Trump said that Wednesday's stock market sell-off was in fact a long-awaited "correction", and that the Federal Reserve, which has been raising U.S. interest rates, had gone "crazy". "It's so tight. I think the Fed has gone insane", Trump told reporters shortly after markets closed, as he arrived in Erie, Pennsylvania for a rally. "They're so tight. I think Fed has gone insane", president Trump replied.
A stock market correction is defined as a decline of at least 10% from the high point of the past 52 weeks, suggesting that major U.S. indices have further to fall.
"I think. the Fed is making a mistake".
In Europe this week, the closely-watched spread between the rates on 10-year bonds in Italy compared with those offered by Germany, which is a measure of the added risk perceived by investors to holding onto Italian debt, hit the highest level since April 2013. As stocks go down, tech goes down more than the stock market, ' she said.
US stocks took their worst loss in eight months Wednesday, with the Dow Jones Industrial Average sinking 831 points and the Nasdaq composite logging its biggest loss in more than two years.
USA consumer price inflation is now above 2% and the unemployment rate is the lowest in about 40 years. Officials expect to hike rates another quarter percentage-point by the end of this year and gradually continue to raise rates at least through 2019. The Fed has predicted that unemployment will remain below 4 percent through 2020 and inflation is expected to track around 2 percent, conditions that Federal Reserve chief Jerome Powell called "remarkably positive".
Despite Wednesday's sell-off, the S&P 500 would still need to more than double its losses. The index fell by more than 3%.
The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy.
Trump said Tuesday that the economy is enjoying "record-setting" numbers and "I don't want to slow it down even a little bit, especially when we don't have the problem of inflation". The Nasdaq fell 315 points, or 4.1 percent, to 7,422.
Fed Chairman Jerome Powell is aiming to extend the second-longest USA economic expansion on record by moving interest rates up just quickly enough to prevent overheating, but not so rapidly that the central bank chokes off growth. In Paris, shares in Kering fell almost 10 percent, LVMH over seven percent and Hermes around five percent.