Two of the three main indexes in Wall Street edged lower on Tuesday, Nasdaq jumpers and the Dow falls
Since reaching a 40-year high for inflation, the US economy has come a long way. Last month, the Bureau of Labor Statistics released consumer product price index figures. The report was somehow disappointing compared to market expectations.
The January consumer price index increased 6.6% year on year, slightly higher than the 6.2% predicted by experts.
On a monthly basis, the CPI index rose by 0.5% in January and 0.1% in December. The higher increase last month left the stock market in a state of mixed gains and uncertainty.
Two of the main three indexes on Wall Street opened lower on Tuesday’s opening trading session. The S&P 500 benchmark declined by 0.05% to 4,135.26 basis points, and the Dow Jones average industry declined by 155.2 basis points (0.34%). Yet, despite the market turmoil, tech stocks skyrocketed. The Nasdaq component rose 0.25 percent, buoyed by gains from Tesla and Meta.
Tesla shares jumped by 4.4% after the American electric car maker delivered a miraculous fourth quarter. Experts classified it as the best earnings quarter in the company’s history. The meta platform’s increasing trend remains weak, however, and the company stocks are slightly recovering from last year’s crash.
Market experts are highly positive that the U.S. Federal Reserve will keep up its current interest rate hikes. Despite falling by more than 4% in the last year, the inflation rate remains too high.
The FED officials expressed their commitment to the plan of shrinking inflation to pre-pandemic levels, which are 2-3%.
According to Philadelphia Fed President Patrick Harker, the U.S. central banks will keep lifting their interest. Meaning the stock market is not yet done with the aggressive monetary policy. Based on current sources, the central banks are more likely to add a new interest hike estimated by a half basis point in February.
Furthermore, market analysts are expecting two additional interest hikes by a quarter point on each interest meeting hike. In the long term higher interest hikes will affect the growth stock earnings process, the housing market, and debts. Internationally speaking, some traders and financial experts are saying that the U.S. federal reserve interest hikes are affecting other countries’ economic potentials, especially those that carry debts.
For others, the aggressive monetary policy will only cause a market recession in the long term.
Harker said that higher interest rates are the only working plan that can help bring inflation to normal levels. He added that it’s unlikely to reach a revocation in 2023.
What about the commodity indexes?
Meanwhile, oil prices seemed to have cooled down by an average of 1%. The West Texas Intermediate price declined by 1,25% to $79 per dollar, and Brent crude oil fell by 1,26% to $85 per barrel. On the other hand, natural gas prices increased by 7.4%, the highest increase since the start of 2023.