Investors in the US stock market suffered huge blows on Friday as Jerome Powell, chairman of the US Federal Reserve, indicated aggressive interest rate hikes in the coming future to tame inflation rates in the country.
While talking at the Jackson Hole symposium, conducted by the Federal Reserve Bank of Kansas City, Jerome Powell stated that it was important to restore price stability in the economy.
He said that the entire process of taming the inflation rate in the country will be time-consuming and will also require using various economic tools with the Federal Reserve of the United States.
According to Jerome Powell, an increase in the interest rates in the country will lead to slower growth and softer labour market conditions, which will eventually result in a decrease in the inflation rate.
Even though a decrease in the inflation rate will be a piece of good news for the US economy, the after effects of aggressive interest rate hikes will bring some pain to household and businesses, Powell said.
He also said that it was indispensable to bring the inflation under two per cent, as an inability to restore price stability in the USA economy would mean far greater pain.
How the US capital market reacted to the speech
The comments made by Jerome Powell during the Jackson Hole symposium led to a ripple effect on US Stock Market as major Stock Exchanges in the US capital markets Dow Jones Industrial Average Index, Nasdaq composite index and S&P 500 index declined by 3 to 4% is on Friday. Wall Street and investors were expecting US Federal Reserve to go easy and slow on increasing interest rates.
Various multi-billionaire investors in the US capital markets lost nearly 1.2 trillion dollars as an after-effect of the speech by the US Federal Reserve chief.
Dow Jones Industrial Average Index lost more than 1000 points on Friday to close the market at 32283.40. Nasdaq composite index of Nasdaq exchange lost 497.56 (-3.94%) to close markets at 12141.71. Meanwhile, S&P 500 index also declined by 3.37% on Friday to close the market at 4057.66.
Shares of Alphabet Inc, the parent company of Google, tumbled by 5.4% on Friday to close the markets at 111.30 dollars per share.
Investment giant Berkshire Hathaway Inc owned by Warren Buffett also suffered huge losses on Friday as its share value declined by 2.66 per cent.
Elon Musk lost 5.5 billion dollars
The richest man in the world Elon Musk, who is the chief executive officer of Tesla Motors Company, suffered a huge loss of 5.5 billion dollars in his wealth on Friday. Second-richest person on this planet, the head of Amazon, Jeff Bezos lost nearly 6.8 billion dollars on the Bloomberg billionaire index.
Microsoft founder Bill Gates and renowned investor and owner of Berkshire Hathaway Inc, Warren Buffett, saw their wealth declining by 2.2 billion and 2.7 billion respectively on Friday.
