Wall Street opened on Wednesday with no clear direction, but its major indicators headed into the red after three days of pulling back in the market. Linked to the Fed’s plans to continue raising interest rates in order to combat inflation.
Losses in technology and retail stocks outnumbered gains in telecoms and other sectors. The Standard & Poor’s 500 It lost nearly 1% on Wednesday, after swinging between gains and losses. Industry average Dow Jones Closed down 0.8% and the compound Nasdaq He lost 0.6 percent. Treasury yields were mixed and energy prices fell. The market closed the month of August lower, after rising in July.
Both of them initially started in positivebut croak That dominated the last few sessions stabilized again soon after Wall Street.
Thus, the main indicators closed the month of August with losses, after the clear declines witnessed since last Friday, Federal Reserve Chairman Jerome Powell confirmed that rates will continue to rise clearly, Many investors’ hopes are dashed.
Wall Street was confident that with indications that inflation might have peaked, The Fed will choose to ease the money rate hikewhich allowed the market to rise in most of the summer.
Stocks got off to a strong start in early August, and continued to rally in July. Investors are encouraged to see these signs on inflationAlthough it was still high, it was flat. This sparked optimism on Wall Street about the possibility of the Federal Reserve cutting interest rates, its main weapon in the fight against inflation. These gains came after a weak first half, as the S&P 500 fell 20% from its recent high and entered a bear market.
This optimism faded in mid-August when the central bank indicated that it would continue to raise interest rates. I will keep them long As long as it takes taming the highest inflation rate of the past four decades. On Friday, Federal Reserve Chairman Jerome Powell emphasized the Fed’s intent in a speech at the central bank’s annual symposium.
Wall Street is concerned that the Federal Reserve could put the brakes on an already slowing economy and push it into recession. Higher interest rates also hurt investment prices, especially more expensive stocks like technology companies.
Traders are now trying to get a clearer picture of How far will the Fed rate increase go and how fastStarting from the next interest rate policy meeting of the Central Bank, which will be held on September 20-21. The Fed has already raised interest rates four times this year It is expected to raise short-term rates by another 0.75 percentage points at the September meeting, according to CME Group.
Investors are closely watching the economic data for any further signs of a slowing economy. slowing down or that inflation It may subside or at least remain at its current level. Businesses and consumers have been hit hard by rising prices for everything from food to clothing. But the recent drop in gasoline prices has brought some relief.
Strong US jobs data helped fuel expectations of a rate hike. The Labor Department reported Tuesday that there were two jobs for every unemployed person in July, making arguments for Federal Reserve officials who say the economy can withstand more price increases to rein in inflation that has hit record levels for several decades.
in Europe, Markets fell after a report showed that inflation in countries using the euro hit another record in AugustEnergy prices have risen, in large part due to the Russian war in Ukraine. Annual inflation in the 19 eurozone countries rose to 9.1%, from 8.9% in July, according to the European Union statistics agency Eurostat.
Inflation is at its highest level since the euro began recording in 1997. The latest figures increase pressure on European Central Bank officials to continue raising interest rates, which could limit inflation as well as economic growth.
(With information from EFE and AP)