All eyes turn to the protest in China against the COVID restriction policy and its effect on Wall Street

covid restrictions

All eyes turn to the protest in China against the COVID restriction policy and its effect on Wall Street.

Rising wages for most American workers have a short-term plan for the U.S. government to at least tame inflation. However, recent data show that purchasing power has fallen to the ground level. According to Moody’s Analytics analysis, the average household in the U.S. increased by $433 in October and November.

October posted the highest percentage increase in consumer product price indexes since 1980. by 7.7%.

Most groceries and food prices jumped by an average between 6-95%, inncldu9n household expenses. Experts agree that increasing wages is the worst strategy if your goal is to tame inflation. Despite the decline in the inflation rate from its August peak, increased wages might cause another inflation peak in the next several months.

Rising wages will force companies to increase their goods and service prices, especially when the global supply chain is disrupted and enduring a massive shortage.

China, the second-largest economy in the world, might use a lockdown to control the Covid variant spread. which is more likely to negatively affect tech stocks and Wall Street in general.

Meanwhile, the signs and the evidence support the idea that inflation peaks are behind us. Yet, market uncertainty is what affects and determines the Federal Reserve’s policymakers’ decisions. Investors hopes for a rate cut were dashed after the FED’s minutes and announcement.

According to the FED chairman, the US central bank will continue to raise interest rates at the same rate as the previous three hikes. On top of that, the rising protests in China suddenly became a concern for most investors.

Wall Street opened lower this week and suffered a second day of losses due to political issues in China. The S&P 500 edged lower by 0.25 percent, the Nasdaq slumped by 0.39 percent, and the Dow 30 feature declined by 0.30 percent.

The protest in China began as a direct response to the government’s COVID restriction policy. The rumors indicate that the country might start a new lockdown policy in the upcoming days. This was unpleasant for most of China, especially in the manufacturing sector.

China is struggling like any other nation in the world. Its GPD is more likely to downgrade in the next year.

In the U.S., all eyes will be on the Federal Reserve chairman’s speech on Wednesday. The speech is more likely to clear up some of the foggy details about the FED’s next move and target policy.

Experts forecast that the probabilities of three-quarter hikes are much higher than two-quarter hikes. Yet, the November CPI report plays a significant role in the decisions of policymakers.

If the consumer product price index declines to less than 6.5%, then the probability of a 50% interest hike will jump to 80%. Yet, till now, all we have are market predictions and assumptions. So, regarding how the market will move in the next several weeks, the uncertainty level is higher than ever.

Written by Editor

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