The Wall Street index begins with significant losses, while the US dollar continues to be a safe haven for foreign traders.
The S & P 500 index fell more than 3% on the first day of trading, reaching its lowest level since April 2021. The Nasdaq index is down by 4% and the Dow Jones average industrial fell by 1.70% by Monday evening.
As worries about more aggressive interest rate hikes rise, investors are cautious and more pessimistic about the stock outlook. Inflation has put a high burden on the U.S. stock market and some believe things will get much worse by the time it peaks.
The EU is pushing and putting pressure on oil exports to ban Russian oil to somehow control energy and gas prices that are at their highest levels in the past three weeks. After posting a war drill this morning, Poland claims to be Ukraine’s strongest ally.
Russia had banned Poland from its gas exports due to the refusal to pay gas experts in the Russian ruble. The ruble has recovered its losses and successfully managed to remain balanced and steady despite the western sanctions.
Multinational traders use the US dollar as a safe haven to offset the losses in their low-revenue local currencies. Yet that could be a double-edged sword.
For the time being, the US dollar is outperforming the Japanese yen, Chinese yuan, and euro. But long-term inflation will cause a decline in the USD value in the long term.
U.S. consumers are capable of fighting or surviving hot prices due to a bullish labor force and salary increases. The labor department’s last week’s report stated that the private sector increased salaries by 4% in April.
The US dollar attracts foreign traders due to a variety of factors, one of which is low foreign currency profits. The US dollar is up 0.09% today, but traders are still concerned about an economic slowdown. Fears of future interest rate hikes drove down the 10-year treasury yield by 1.14%.
Brent and crude oil remain above the $100 per barrel price level, and the EU is racing against time to ban Russian oil.
Twitter stocks fell by 3% on Tuesday on worries of more pullbacks in companies’ revenues in the future. Inflation pressure will eventually lead to a major pullback and a decrease in corporation revenues. At some point, the average consumer will start to think about their basic needs. That means priority for energy, food, and some essential goods.
That means some profits and gains for leisure and hospitality, but on the other hand, luxurious corporations will see a sharp decline in their revenues.
Furthermore, the S&P is approaching correction territory, which requires a 20% drop, but it is still outside of the danger zone. But all indicators suggest that a correction is needed.
In terms of what will happen in the future, experts believe that multiple aggressive interest rate hikes will lead to more new lows in 52 weeks in both the S&P and Nasdaq indexes.
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