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A brutal session for US stocks Wednesday with all three major stock indexes falling sharply. The S&P 500 closed down about 3.3%, its biggest single day drop since February. The Nasdaq losing 4% of its value. Reuters' markets reporter Lewis Krauskopf.>> You are seeing tech stocks getting hammered. The tech sector is the worst performing group.
Today, all the big names, Alphabet, Apple, Amazon, Netflix, Facebook, those are among the biggest drags on the S&P 500. Considering declines that started last week, we now have the Nasdaq which is heavy with tech names down about 7% from its all-time high.>> Investors are pointing to higher interest rates as being the major reason why stocks are pulling back.
>> Interest rates have spiked starting last week. It's reminiscent of January and February when the stock market corrected 10% and made a big spike in interest rates. Higher interest rates are a problem for a few reasons for stocks. One is that higher interest rates mean higher bond yields, which means more competition among investors for stocks.
Higher interest rates also means higher borrowing costs, both for consumers and for businesses.>> So after Wednesday's turmoil, what's in store for Wall Street for the rest of this week?>> Investors are looking at Thursday's CPI numbers to get a better read on inflation. If inflation comes in hot, that could put more pressure upward on interest rates and yields, and that could hit stocks.
We're also starting to get in the earning season, bank earnings at the end of this week, and then next week it starts to get really heavy with the earnings. It's been a huge year for corporate profits, so investors are counting on that to continue. So while investors are bracing for a potential correction in stocks, whether that's a 5% pullback or maybe something even a little deeper.
I think for the most part, investors are not worried about a more severe pullback of 20% or more in the stock market.