Imagine discovering when you wake up that you have lost over $10 billion overnight. Jeff Bezos, the creator of Amazon, may sympathize after losing $9.8 billion on Wednesday after market closing, according to the Bloomberg Billionaires Index.
Elon Musk, CEO of Tesla, and Mark Zuckerberg, CEO of Facebook, were also among the biggest losers. Warren Buffett and Bill Gates both suffered massive losses in a single day.
Why did it crash?
The stock market collapse was caused by rumors that the US Federal Reserve will significantly raise interest rates next week. According to a study on wholesale inflation, pressures are growing underneath the surface as prices continue to rise quickly.
To combat the highest inflation in four decades, the Fed is acting aggressively on interest rates. The market was shaken by the news of rising prices on Tuesday since there are indications that inflation is starting to become more tenacious and that the authorities may need to take serious measures.
Analysts estimate that there is a one in three possibilities that the Federal Reserve would increase its benchmark rate by a full percentage point next week, which would be four times the typical increase. Four times already this year, the central bank has increased its benchmark interest rate, the latest two by three-quarters of a percentage point.
Crashes in stocks, modest gains
The worst-hit tech companies on Wednesday were semiconductor giant Nvidia dropping 9.5 percent and Meta falling 9.4 percent. Stocks and these billionaires fared a little better on Thursday as equities were generally higher after a choppy trading day that resulted in small gains on Wall Street.
The probability of an increase in borrowing costs throughout the world, including a potential 100 basis point increase in US interest rates next week, kept bears on the hunt on Thursday, which resulted in a mixed performance by the world stock markets. Fitch has reduced its forecast for global GDP growth by 0.5 percentage points, from 2.4% to 2.4% in 2022, and from 1.7% to 1.7% in 2023.