The U.S. stock market is threatened by a combination of slow growth and high inflation.
Since the all-time record in January 2022, the stock market has been unconvincing and fatiguing for traders and investors. Investors felt the danger and the high vitality that the market is carrying now. The Russian and Ukrainian wars have encouraged inflation and now we are looking at an international food shortage crisis.
Yet, the U.S stock index saw a relief rally this week, oil prices fell below $100 and gold prices are declining. The U.S. government is taking the necessary plans and making several calms with various oil and gas suppliers. The U.S. now has a new interest in Iran, Qatar, Algeria, and other countries that can replace its Russian oil importers.
Traders this week are feeling a bit calm after notching a big fall in oil prices. U.S. crude oil fell from $130 a barrel to $96.3 per barrel. Plus, the international Brent benchmark fell about 6% this week compared to last week’s price. This decline eased the market’s worries after forecasting that oil prices might reach $180 per barrel by the end of 2022.
As for gold, its prices have declined for the third day in the longest decline period since the Russian invasion. The Russian war against Ukraine is threatening the global economy with a combination of slow growth and high inflation. These two threats are the trend that concerns every trader and shareholder in the world. Putting pressure on the commodity market could lead to an increase in commodities. Yet, today’s stock market results were so easy for investors and traders.
The S & P 500 gained about 1.6%, while the Dow Jones average industrial rose by 1.3%, plus an increase in Nasdaq heavy by 2.2%. The tech-heavy Nasdaq composite rose by 2.2% after recording several losses last week. Apple, Netflix, Alphabet, and Meta led the Nasdaq gains, recording increases in a range of 1%-2%.
As mentioned before, the current economy’s volatility is high, which could open the door to a short-term recession. The next Federal Reserve meeting will be this Wednesday. Traders believe that the first interest hike since 2018 will be this week. Yet it is unclear whether the policymakers will change their mind and increase more than 25% of the central bank’s interest hikes.
The meeting conditions might change with the new threat of a new COVID wave. China today announced that it will start a lockdown from today because of the increasing number of COVID-19 cases. One of the factories that the lockdown includes is Apple supplier Foxconn. The lockdown might affect the tech stock’s recovery from last week’s losses.
The factory will be locked from today, which will affect the tech company’s supplies and therefore their supply chain. Apple gained more than 1% leading the tech-heavy Nasdaq composite gains with other names which are
- Microsoft rose more than 2%.
- Netflix rose by 1%.
- Alphabet’s stock increased by 2%.
- Apple and Meta rose more than 1%.
Oracle jumped by 5%.
The tech indexes bounced back thanks to these companies’ gains this week, but the Chinese lockdown might revert these gains and slow down the tech recovery cycle.
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