Stock Market News: Fed’s Powell Sinks Dow, Electronic Arts Speculation, Moderna Takes On Pfizer – ‘The risk is that they will crash the economy’: Markets fall as investors fear the Fed will start a recession
Can the Federal Reserve curb inflation and somehow prevent the world’s largest economy from sliding into recession? Investors have serious doubts.
Stock Market News: Fed’s Powell Sinks Dow, Electronic Arts Speculation, Moderna Takes On Pfizer
After a spectacular late-night rally on Wednesday that saw stocks snap a five-day losing streak, stocks are back in the red on Thursday. In Asia and Europe, investors are dumping risky assets. And U.S. futures point to a broken opening.
Asian Stock Markets Mixed After Wall St Sinks Further
At 5 a.m. ET, S&P 500 futures were down 2.25 percent, more than enough to erase yesterday’s gains and send the benchmark further into a bear market. Sales look set to continue their slide, with big names such as Apple (down 2.9% of competition) and Tesla (down 3.6%).
And in another sign of the dangerous situation hanging over the markets, crypto is once again in the red: Bitcoin is trading around $21,200. Elsewhere, the safe haven is rising.
Simply put, investors see pain ahead, even more so after yesterday’s historic three-quarter interest rate hike. In order to push back rampant inflation, Fed Chairman Jerome Powell has signaled that the central bank won’t fire the bazooka any time soon. He sees another big rate hike of between 50 and 75 basis points at the July FOMC meeting. The Fed also sees weak economic growth, high unemployment and a series of rate hikes next year. What they are less clear about is: when will inflation peak and begin to decline?
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Complicating the Fed’s strategy is the type of inflation that is hitting Americans’ wallets. It is largely driven by rising food and fuel prices and, as Powell acknowledged on Wednesday, the central bank is largely powerless to do anything about it.
Meanwhile, the worsening economic data has forced the Fed to attack rates at all costs. Such a move would essentially eliminate the possibility of a soft recession and could curb corporate profits and dampen household spending, many on Wall Street now believe.
“The Federal Reserve will raise interest rates as long as policymakers tame inflation, but the risk is that they also tame the economy,” said Ryan Sweet, senior director of Moody’s Analytics, after Powell’s press conference yesterday afternoon.
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Sweet sees the worst, as the effects of the Fed’s moves to raise interest rates and end its bond-buying program, which began earlier this year, begin to ripple through the economy. Add it all up, and a backlash ensues.
“The Fed may face a Hobsonian choice: pull the economy into a mild recession, like our scenario, to control inflation, or wait and provoke a more significant recession, as stagflation is possible next year. If the Fed does that don’t. , it’s not aggressive enough.
Bill Adams, chief economist at Dallas-based Comerica Bank, is not so pessimistic about the US economy, but he is also starting to rethink the possibility of a recession.
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“Following the FOMC decision, last Friday’s weak CPI report and [Wednesday’s] weak sales report, I am raising my view on the likelihood of a recession starting in 2022 to 25%, down from 10% previously. I already saw. I see. the risk of a recession from 2023 to 30%, compared to 25% before,” he says.
The Swiss National Bank on Thursday raised interest rates by half a percentage point more than expected, the first time in 15 years. It follows an extra session by the European Central Bank aimed at stabilizing the government debt markets there and preventing the euro from falling further. A weak euro, a currency that is quickly approaching the dollar, means worse news for European consumers, as it makes imports more expensive, essentially another form of inflation.
Fed Decision: Markets Walk On The Bright Side Of The Road With Powell
The US dollar floats around Powell’s Jackson Hole speech
S&P 500 poised to rally ahead of Jackson Hole As markets await Powell’s possible return 2022-08-26 05:00:00 Crude oil prices unconvinced by S&P 500 ahead of Jackson Hole, 2022 PCE data- 08-26 03:
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The S&P 500 is poised to move ahead of Jackson Hole, where markets await Powell’s potential turnaround.
Gold and Silver Technical Forecast – Precious Metals at Risk 2022-08-26 20:00:00 Gold Price Forecast – Resistance Near Trendline Blocked – Levels for XAU/USD 2022-08-25 18:30:00
British Pound (GBP) Forecast: GBP/USD faces rising inflation and energy prices.
Friday’s Stock Market Close Indicates ‘classic Bear Market’: Strategist
US dollar hovers around Powell’s Jackson Hole speech 2022-08-26 14:52:00 S&P 500 prepares to close on Jackson Hole as markets await Powell’s potential return 2022-08-26 05:00: 00
Real time news UK energy bill has increased by 80%. Double-digit inflation is here to stay in the coming months. GBP/USD remains under pressure. https:///forex/market_a…
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To Fight Inflation, The Fed May Have To Sink Stock Prices
U.S. stocks have fallen in recent weeks on fears that the Federal Reserve’s aggressive moves to scale back stimulus to stem inflation will cause a severe blow to the economy, but with Wall Street in bearish mode, traders are wondering whether the institution will stay the way or not. turn up . with a less aggressive attitude. With the CPI reading at a four-decade high, the bank can’t hold back, but it could help temper expectations of sharper inflation.
In late March, after many Fed officials signaled they were prepared to anticipate a hike and inflation accelerated, bets on several non-standard rate hikes consolidated at 50 basis points, and July federal funds futures reached 151bp adjustment. of 120 bps (see diagram). Soon after, the new rally in stocks that had been going on for most of that month came to an abrupt halt, leading to a massive selloff that sent the S&P 500 and Nasdaq 100 down 8.8% and 13%, respectively. .4%, in April. For the S&P 500, it was the third-worst start to a year on record.
Now some traders believe policymakers may go even further and raise borrowing costs by 75 basis points over the summer to restore price stability. These expectations have not fully caught up, but they continue to increase investor anxiety, volatility and risk aversion. That said, there will be an opportunity to gauge appetite for big moves on Wednesday when the FOMC wraps up its May meeting, an event where the bank is expected to tighten by 50bp and announce a plan to start reducing its balance sheet. These measures have been widely telegraphed and fully priced, hence the focus on Powell’s press conference and guidance on the speed of the normalization cycle.
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With gross domestic product declining in the first quarter, the recession story gathering pace, and markets in turmoil, I’m inclined to believe Powell will put his foot down in the market by subtly signaling that the bank doesn’t think rates will increase by 75 basis points. . . This message could help stabilize confidence and reduce fears that aggressive Fed action will lead to an economic downturn.
The alternative is terrifying. If Powell is aggressive, stocks could extend losses, a scenario that would further erode confidence and ultimately weigh on consumption through the “wealth effect.” To see this, let’s assume that the final failure continues. Under this scenario, millions of Americans with some of their wealth tied up in stocks could see the value of their investments drop, prompting them to cut back on spending. If the American consumer fails, a recession may be inevitable. The Fed knows this, so policymakers can try to lighten the mood by offering less aggressive guidance to stop the bleeding on Wall Street. The S&P 500 and Nasdaq 100 could rise if this prediction comes true.
Euro technical analysis: EUR/USD stuck in narrow range, EUR/JPY at key resistance 2022-08-08 17:30:00 EUR/USD stuck in horizontal channel, but US NFP data could crash 2022-08-04 17 : 30:00 EUR/USD ahead of FOMC. Will the Fed surprise with a 100bp rate hike? | US inflation data in brief 2022-07-11 17:00:00 We detected that you are in Internet Explorer. For the best experience, upgrade to a modern browser. SAFARI CHROME FIREFOX
Powell Says Us Economy Is In Strong Shape, Fed Can Avert Recession
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