The FOMC protocol scared Wall Street investors – Puls Biznesu

The S & P500 and Nasdaq indices, which were stuck in the red areas, deepened losses after the disclosure of the FOMC protocol were much worse since the beginning of the session.

All in all, at the end of the session, the Dow Jones IA index fell by 1.07 percent. The S & P500 index fell by 1.94 percent. In turn, the technological Nasdaq appeared by as much as 3.34 percent.

The records showed that among the most important representatives of the US monetary authorities there is a growing belief that interest rates must go up faster than expected, which is justified by the increasingly better condition of the labor market and high inflation.

The ADP report, presented on Wednesday, surprised with more than expected number of new jobs in the private sector outside of agriculture in December. Instead of the expected 415 thousand. there were almost twice as many, because 807 thousand. This is the highest number of jobs in seven months.

Therefore, Thursday’s report on the so-called new unemployed and the number of people continuing to receive unemployment benefits, especially Friday’s government data on the unemployment rate and changes in the number of jobs in December.

The readings so far have shown that the condition of the labor market is systematically improving, and this is an important component taken into account by the monetary authorities regarding the direction of interest rate policy.

Additionally, the PMI index for services also turned out to be better than expected. It is true that it fell to 57.6 points in December, but it exceeded the median of the projection and remained clearly above the 50-point barrier separating the development of a given sector from its shrinkage. This shows the growing power of the sector that is the driving force of the American economy.

In such a macro environment, therefore, it is not surprising that the increase in the yields of US bonds (profits from the benchmark 10-year bonds reached 1.71%, the highest level since April) proving the growing confidence in the debt issued by the US and an incentive to move away from the more risky equities on the for safer assets, such as the aforementioned treasury securities or gold. Kruszec increased on Wednesday also due to the weakening of the dollar. Oil was also appreciating. The EIA report showed the sixth consecutive weekly decline in raw material inventories, which outweighed the information about the decline in demand and an increase in the supply of “black gold”.

Bitcoin depreciated in value and its valuation fell by 4 percent. to just over 44.4 thousand USD.

The biggest brake on the session was the tech sector, which led to a deep sell-off of the Nasdaq index and limited the potential of the S & P500. The real estate sector, which is “sensitive” to the level of interest rates, also performed very poorly.

About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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