Dow Jones closes in red: Powell eases fears of interest rate hikes a bit

The Dow Jones closes in red
Powell eases the fears of a rate hike somewhat

Statements by Federal Reserve Chairman Powell are now causing Wall Street to recover. But the Fed remains on track and investor fears of a recession do not subside. The Dow Jones closes in the red, oil prices drop significantly.

US stocks recorded small losses after a shifting rise and fall. The highly volatile environment on Wall Street therefore persisted and recession concerns have not been allayed. of the Dow Jones Index fell 0.2 percent to 30,483 points. of the S & P-500 and the Nasdaq-Composite each closed 0.1 percent less. 1,561 (Tuesday: 2,473) price winners and 1,720 (830) losers were seen. 116 (96) securities closed unchanged.

With the statements by US Federal Reserve Chairman Jerome Powell at the start of business, the stock market had in the meantime recovered. Powell sticks to the fight against inflation. But he pointed out that the US economy is very strong and well positioned to cope with tighter monetary policy. The Fed does not want to cause a recession. He also pointed out that the markets have priced the interest rate path “appropriately”. According to Evercore ISI, Powell was a little less aggressive than expected.

S&P 500 3,760.55

But the Fed remains on track. Fed President Richmond Branch Thomas Barkin signaled his support for a rate hike of another 50-75 basis points in July. Such a rate hike seems “reasonable enough,” Barkin said. Barkin described inflation as “high, broad and persistent”. Charles Evans of the Chicago Fed also expects a step of this magnitude. However, he doesn’t see the need for a whopping 100 basis point rate hike. It does not appear that the Fed will be affected by the 21% year-to-date decline in the S&P 500; ING analysts commented that their current rhetoric is that the US economy can handle higher interest rates.

According to a Fed research paper, the US economy faces a greater risk of recession in the next year or two due to widening imbalances in goods and services markets, including the labor market. The probability of a recession in the next four quarters is just over 50 percent and the probability of a recession in the next two years is two-thirds.

Oil prices drop significantly

Oil prices fell significantly due to recession fears. The price per barrel of the variety WTI it fell 3.9 percent Brent-The price fell 3.3%. US President Joe Biden, meanwhile, plans to call for a three-month suspension of federal taxes on gasoline and diesel to cope with record gasoline prices in the country, according to senior government officials.

Crude (Brent)
Crude (Brent) 109.04

In the FX market, the dollar fell on Powell’s comments. of the Dollar index fell 0.3 percent. Government bonds were in demand as a safe haven given recession fears. The 10-year bond yield fell 12.9 basis points to 3.15% as prices rose.

The share of Meta platforms, the mother of Facebook, was down 0.8%. The company agreed to change the fundamentals of the system following a critical investigation into online corporate advertising practices by US federal agencies. Authorities accused the group of discriminating against users based on ethnicity, gender and other factors for accommodation listings on the meta-platform.

Merck with vaccine approval

The pharmaceutical company Merck & Co. (+ 1.3%) received further approval for its Vaxneuvance pneumococcal vaccine in the United States. The company announced that the U.S. Food and Drug Administration (FDA) has approved it for use in babies and babies as young as six weeks.

Merck Co
Merck Co 84.80

La-Z-Boy up 7.9% after home decorator posted record fourth quarter sales and profits. For the first quarter, La-Z-Boy expects sales to increase 7 to 10 percent over the same period last year, despite existing macro and geopolitical uncertainties.

Korn ferry increased by 5.3 percent. The personnel services provider exceeded expectations in terms of sales and earnings in its fourth commercial quarter and posted record profits. The company has also given an optimistic outlook because it expects the supply of skilled workers to be low in the years to come.

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