Market Recap: Dow Falls, Nasdaq Soars with Amazon Surge, WTI Crude Drops Over 4%
The Bank of England shocked the market with its recent interest rate hike percentage. In England, inflation remains too high, currently above the 8% year-over-year increase. Mortgages and rents are increasing to their highest levels in years.
This in turn forced the English central banks to walk a different path, which is not to be cautious with interest rates. Today, the Bank of England and monetary policymakers announced that they would raise their key interest rates by a half percentage point.
The decision to increase interest rates was driven by the BoE’s concerns over “significant” indicators suggesting that inflation in Britain would persist for a longer period than anticipated. This proactive action by the central bank reflects its determination to address the inflationary pressures in the country.
The stock market reacted differently. According to the news, the main indexes that were affected negatively were the oil market. For the first time this year, U.S. West Texas Intermediate and Brent crude oil fell below $70 per barrel. Both indices declined by an average of +4%.
The U.S. WTI indexes were down by 4.18% to $69.80 per barrel, whereas Brent oil climbed a bit from below $70 to $74 per barrel. Natural gas prices rose by 0.27%, and gold reminded me of the $1920 level.
The news raised some worries about an economic recession in England. Particularly when Grman announced a market crash last month. Inflationary pressures are not easily resolved in many Western countries, including Britain, posing challenges for policymakers and potentially impacting the overall economic stability and well-being of these nations. Inflation in many Western countries is proving to be “stickier” than what central banks would prefer. The term “sticky” in this context means that inflation rates are not decreasing or responding as quickly as desired, despite the efforts of central banks to control them.
Moreover, the U.S. Federal Reserve chairman has repeated his comments and confirmed that there will be a few more interest rate hikes this year.
This news was unexpected for inventors and marketers, especially when the Fed paused its rising key interest rate this month. Furthermore, Powell hinted that there is a 74% probability of a quarter-percentage-point rate hike occurring at the Federal Reserve’s meeting in July. This suggests that market participants are anticipating a potential tightening of monetary policy in the near term.
Meanwhile, in the stock market, The Nasdaq was experiencing a boost from the performance of technology stocks, primarily driven by the notable increase of Amazon.com Inc. (NASDAQ: AMZN) shares, which have risen by 3.4%. The heavy tech composite Nasdaq rose by 0.79% to 13,611.22 basis points.
The S&P 500 benchmark slightly increased by 0.2% to 4,378.60 basis points. In turn, this indicates that a bull market is still ongoing for the indexes. Still, The Dow Jones Average industry was negative on Thursday’s trading session. The indexes are currently down by 0.4% to 33,934.97 basis points.