New home sales in the U.S. declined for the fourth month amid fears of a market recession.
A recession in the United States appears more likely these days, and Wall Street may crash soon, as two of the three major indexes are already in bear market territory. For the first time today, FED Chairman Jerome Confession stated that inflation and high material costs will make its previous soft-landing economic plan difficult.
The Federal Reserve’s attempt to bring prices to their pre-pandemic levels might end in a big failure. Rising interest rates have come too late, and inflation is way out of the control of the Federal Reserve and policymakers. The initial FED plan was to carry out at least three 50 bps interest hikes in May, June, and August, but now it seems that the plan will change.
At the moment, Powell’s recent talk hints at the fact that it is uncertain whether the Fed will continue with balancing its bond-buying strategy or whether it will lower its interest rates.
The market can’t simply bear more losses. The tech giants are lardy in a bear market. The Nasdaq has dropped by more than 30% year over year. Major tech companies are taking losses due to interest rate hikes that turned out to have a negative impact on tech stocks.
As for the U.S housing market, the new home sales declined for the fourth month straight, according to the Census Bureau and Department of Housing and Urban development.
According to their report, the sales of new homes in the U.S. dropped by 16% in April due to a decline in buyers’ enthusiasm for buying houses. Annual home sales in the United States are down 26.9%, the largest drop since the pandemic began. Rising interest rates have driven mortgage rates to their records, adding massive pressure on the housing market and borrowers as well.
Furthermore, a related survey discovered that due to their lack of confidence in the market’s current state and future outlook, US buyers are only considering necessary expenses. That makes some sense since inflation has taken this much time. Even mee stocks are feeling the heat, according to 2022’s first fiscal growth and profit reports. For example, Amazon failed to deliver a good first-quarter revenue report. Walmart and Target also reported below-estimated revenues. After the disappointing subscriber reports, Netflix remains in a weak posting, and Meta is still under attack from politicians.
The escalation between Elon Musk and proportion also affected Tesla stocks. All things considered, these high-yield stocks represent a large proportion of Wall Street, so their performance will affect the WLS index for good or bad.
The high construction work increases in building materials and the complex issues in the labor market have all contributed somehow to increasing house prices in the U.S. To combat the highest inflation rate over the past 40 years, central banks have increased their interest rates. But one of the side effects of this inflation is the increase and the jump in mortgage rates and the bond market, including the 10 and the 3-year fixed mortgage rates. It’s more likely that we will see a housing market recession in the next few months.