Wall Street opened this Wednesday without a clear direction, but its main indicators leaned towards the red after three days of declines in the market linked to plans by the Federal Reserve (Fed) to continue raising interest rates in order to combat inflation.
Losses in technology and retail stocks outweighed gains in the communications and other sectors. The S&P 500 it lost almost 1% on Wednesday, after swinging between gains and losses. industry average dow jones closed 0.8% down and the compound nasdaq 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 had initially started in positivebut pessimism which has dominated the last few sessions took hold again shortly after Wall Street.
Thus, the main indicators closed August with losses, after the clear drops that have been seen since last Friday the president of the Fed, Jerome Powell, confirmed that rates will clearly continue to rise, dashing the hopes of many investors.
Wall Street was confident that with signs that inflation may have peaked, the Fed would choose to soften the rise in the price of moneywhich allowed the market to rally for much of the summer.
Stocks got off to a solid start in early August, continuing the July rally. Investors were encouraged to see that signs of the inflation, although still elevated, were leveling off. This fueled optimism on Wall Street about the possibility that the Federal Reserve could reduce the rise in interest rates, its main weapon in the fight against inflation. These gains came after a weak first half, in which the S&P 500 fell 20% from its most recent high and entered a bear market.
That optimism faded in mid-August when the central bank signaled it would continue to raise rates. and i would keep them tall as long as it takes to tame the highest inflation of the last four decades. On Friday, Federal Reserve Chairman Jerome Powell underscored the Fed’s intent in a speech at the central bank’s annual symposium.
Wall Street is concerned that the Fed could slam on the brakes too hard on an already slowing economy and send it into a recession. Rising 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 the Fed’s rate hikes will go and how faststarting from the next central bank interest rate policy meeting, which will take place on September 20 and 21. The Fed has already raised interest rates four times this year and is expected to raise short-term rates by another 0.75 percentage point at its September meeting, according to CME Group.
Investors have closely watched the economic data for any further signs that the economy is slowing down. slowing down or that the inflation it may be cooling down or at least staying at its current level. Businesses and consumers have been hit hard by rising prices for everything from food to clothing, but recent declines in gasoline prices have brought some relief.
Strong US jobs data has helped fuel expectations of further interest rate hikes. The Labor Department reported Tuesday that there were two jobs for every unemployed person in July, giving arguments to Federal Reserve officials who say the economy can tolerate more rate hikes to rein in inflation that is at record highs. of several decades.
In Europe, Markets fell after a report showed inflation in countries that use the euro hit another record high in August, as energy prices soared, largely due to Russia’s war in Ukraine. Annual inflation in the 19 eurozone countries rose to 9.1%, from 8.9% in July, according to the European Union’s statistics agency Eurostat.
Inflation is at the highest levels since the euro began to be registered in 1997. The latest figures increase pressure on European Central Bank officials to keep raising interest rates, which may curb inflation but also economic growth.
(With information from EFE and AP)