A disaster might hit the U.S. economy. How is that?
Despite concerns about new sanctions against Russia and their impact on the global supply chain, the S&P and NASDAQ led the gains this morning. The giant social media site, Twitter, bounced back by 20%, recording one of its best shares climbs since the pandemic. Global political forces are talking about implementing new and hard sanctions on Russia. Now there are talks about cutting off Russian gas and oil exports and finding alternative exporters.
The Russian ruble and stock are at their highest levels since the beginning of the war, as a result of Russian President Putin’s recent decisions. Russia says that from now on, all oil and gas transactions will be in the ruble. This decision came as a massive hit to the U.S. dollar and the euro.
However, it seems that the war had a positive effect on the NASDAQ heavy stocks, too. The heavy tech index experienced a sloppy. However, in a few short weeks, the tech index recovered some of last year’s losses. But it’s not yet anywhere near its normal level.
In terms of Wall Street indexes, the S&P 500 gained 0.47% today to close at 4,567.21.
The Nasdaq heavy climbed by 222.32 points to settle at 14,483.82 points.
Yet, the Dow Jones average industrial index declined this Monday morning by 5.48 points to settle at 34,812.8 points.
According to Reuters, the S&P 500 is regaining ground, with 10 new 25-week highs and only three new lows.
For the Nasdaq heavy, the report found that the tech index recorded 44 new weekly highs and 50 new lows.
Analyses believe that, under recent performance, the U.S economy is in a safe spot. The economy is moving in the right direction. In terms of early recession, the Federal Reserve believes that the current economy can fight the recession.
Yet, on the other hand, investors are getting mixed sentiments about last week’s job growth report. The March reports increased but remains below the expert estimates, which increases the odds of a 50% interest hike in May.
The 10-year Treasury yields increased this past week, as did the 30-year treasury yields. From an expert’s perspective, the changes in the bond market and treasury yields are usually a strong indication of a rising recession.
Thinking about it, all these conditions support an early-stage economic recession. Inflation is at its highest level since 1994.
Last week, the consumer spending report added that consumer spending decreased in February. Oil prices are rising at their fastest pace since 2014. Furthermore, as a result of the ongoing market downturns, traders are shifting their focus to safe assets.
All these indicators confirm multiple 50 basis point interest hikes in May, June, July, and September. If that occurs, an aggressive interest rate hike by the policymaker will almost certainly draw the housing market first. Mortgage rates will increase to their all-time high level. Making it harder for sellers to sell their homes. Inflation is already putting pressure on the building industry because of the supply chain shortage and materials’ high costs.
Borrowers will find it extremely difficult to borrow money, and that will affect the start-up industry and small businesses.