Wall Street bounced back, but is it enough to cover this year’s selloffs?
Wall Street bounced back on Tuesday morning at the same time that investors were waiting for this week’s key events. Wall Street indexes fell sharply this week and last, just two days after central banks raised interest rates by 50 basis points.
This week, major events will include the US CPI and EIA crude oil inventory report on Wednesday and the US PPI report on Thursday.
This stock market selloff has wiped out approximately $9 trillion from the US equity market, putting additional pressure on monetary policymakers.
The keyword is inflation, which is driven by multiple factors, including the Chinese lockdown and the West European war.
As for the current update on the war between Russia, Ukraine, and its allies, Japan is seeking a new approach to ban Russian oil and decrease the macro-effects on its energy users.
On Tuesday morning, the industry minister of Japan announced that his nation has agreed to ban Russian oil with the other seven nations. He added that his country will choose when and how it will start its banning process. The country isn’t fully ready to ban Russian oil because of its significant impact on its energy sectors and consumers. Japan will decide when to implement the official ban after further consideration of the economic implications of such a decision.
As a result of the Russian gas blackmail, the demand for non-Russian gas has increased significantly in the surrounding areas. Russia cut gas supplies from Poland and Bulgaria, the first two countries to do so. However, Greece is constructing a new pipeline that is expected to provide at least some of the Russian gas.
Greek is building a new pipeline that is expected to provide at least some of the amount of Russian gas.
In the U.S. market, the effects of these external factors were clearly observable by traders. After three days of losses, the S&P 500 was up 0.14% at 3:44 PM New York time. The heavy tech NASDAQ moved by 0.84%, whereas the Dow Jones fell by 0.46%.
This week’s US PPI reports will revile this week’s jobless claims with no signs of recovery in the market. As for the bond market, the 10-year treasury yield fell by 5% to 2.98 as of Thursday morning. For foreign traders, the US dollar remains a source of income and a profitable investment.
As of Thursday at 3:50 PM, crude oil prices were estimated at $99.60 per barrel, a 3.36% decline compared to yesterday’s levels.
Arguably, the stock market has had unpredictable trends these past couple of months. The Federal Reserve realigns in a death battle with inflation, which is more likely to affect the labor market first.
From the heart of every expert, inflation is an early indicator of market recession. One of them is a lower employment rate.
In the long term, inflation will lead to price peaks due to increases in materials and production costs. The unemployment rate will increase, and that’s what the labor department is aiming to prevent.
Is it achievable? Some experts believe that increasing interest rates to cool down prices while maintaining a strong labor market is way too far to achieve. Higher interest rates typically result in higher jobless claims and an increase in the unemployment rate over a long period, typically 2-3 years.
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