Inflation worries and Fed’s hawkish speeches sent Wall Street down
- 17 February 2023
- Posted by: Federica Montella
- Categories: eToro CopyTrader, Investing
US stock dropped on Thursday
Yesterday was a negative day for Wall Street.
All three major indexes have registered losses.
The S&P 500 finished at -1.38%, the Nasdaq ended the trading session at -1.78% and the Dow Jones ended at -1.26%.
The reasons behind the negative movement are that economic data are still strong and the hawkish speech of the Fed’s officials.
The investors’ sentiment remains bullish as indicated in the graph below:
Sentiment indicator – Fear & Greed Index
The market sentiment is at 69 in the “Greed” mode, less than the data registered yesterday.
Producer Price Index and jobs data
The producer price index for January has been released yesterday by the Labour Department.
This particular index is very important to understand the level of inflation, in fact, it measures the change in the price of goods sold by manufacturers.
The data shows a monthly increase of 0.7% versus the 0.4% forecasted.
The annual PPI rate was at 6% in January while the expectations were at 5.4%, so the actual data is far away from the estimations.
Inflation worries have risen after yesterday’s data.
On Thursday, have also been released the weekly initial jobless claim which was 194,000 versus the 200,000 forecasted.
The job market remains very strong even after the restrictive Fed’s monetary policy.
Fed’s officials hawkish comments
Yesterday, two US central bank members have spoken.
Loretta Mester, the Federal Reserve Bank of Cleveland president, said she is in favour of 50 basis points interest rate increase at the next Fed meeting in March.
Moreover, James Bullard who is the Federal Reserve bank of St. Louis president said that he was not in support of a quarter-point rate increase during the last meeting.
He was open to a rate increase of 0.5%.
Based on the current economic conditions, the stubborn inflation and the latest Fed official speech, the tightening monetary policy implemented by Federal Reserve has not come to end yet and most probably there will more hikes than expected.
Portfolio Update
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Federica Montella
eToro Popular Investor
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