The S&P and Nasdaq Fall Amid Fears of Further Interest Rate Hikes
The process of getting inflation back down to 2 percent has a long way to go,” said Powell. “It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation.
These words were pointed out by the U.S. Federal Reserve chairman in response to several questions by lawmakers in his recent congressional testimony.
Jerome Powell also pointed out that their monetary policy won’t stop and that there will be more interest rate hikes by the end of this year. Probably starting in July and August. This statement indicates that futures traders, who speculate on the future movement of interest rates, anticipate that the Federal Reserve (commonly referred to as the Fed) will increase interest rates by 0.25% during its upcoming meeting in July. The Fed had previously halted its series of rate hikes during its most recent meeting, which occurred the previous week.
In turn, this has shaken the market rally a bit; we see that clearly in today’s mixed earnings. Particularly among tech stocks, which still hold some vulnerability to the tense news.
The S&P 500 benchmark was down by 0.17%, and as of 14:40 am, the Nasdaq composite recovered its losses and climbed from a 1% decline to 0.7%. Technology stocks were mixed today, but mainly affected by Amazon and Tesla declines.
Amazon.com, Inc. disclosed the dates for its annual sale event called Prime Day, which will take place on July 11 and 12. This year, Amazon also introduced invite-only deals. Still, the company faced a lawsuit from the Federal Trade Commission (FTC) regarding its Prime subscriptions. The FTC alleged that Amazon coerced customers into signing up for Prime without their consent. As a result, Amazon’s shares declined by 1.2%. Technology stocks had a catastrophic trading session today. Tesla shares were down by 4%. Meta fell by 0.56%, Apple fell by 0.17%, and Netflix plunged by 1.7%.
The stock of FedEx Corporation (NYSE: FDX) declined by 1.3% following the company’s report of a decrease in quarterly earnings.
As for Chinese-listed stocks, The shares of Chinese electric vehicle (EV) manufacturers responded to the announcement of tax breaks by the Chinese government aimed at boosting EV sales. Li Auto Inc. experienced a 2.5% increase in stock price, whereas Nio Inc. saw a 2.3% decrease, and Xpeng Inc. dipped by 2.2
Keeping with Powell’s comments, the labor market is steadily growing even with the tightening market conditions. Additionally, Powell mentioned that there are indications of improvement in the job market. He highlighted an increase in labor force participation, which means more people are actively participating in the workforce. He also noted a decrease in wage growth, suggesting that wage pressures may be easing. Furthermore, Powell pointed out a drop in job vacancies, which could indicate that more job openings are being filled.
As for the U.S. dollar, in his response to the lawmaker’s question, Powell says that the U.S. is still the dominant currency reservoir in the world. Despite the rising concern about dethroning the U.S. dollar as the leading currency,