Wall Street is struggling, and global central banks are expecting the worst
Economists, CEOs, traders, and investors have argued that higher interest rates have caused what some call the new normal. It only seems logical to call September’s CPI report shocking and an-encouraging to some extent.
The Bureau of Statistics released the consumer index report on Thursday, and it was a shocking one. The inflation rate has risen by 0.4% this month and posted an 8.2% year-over-year increase.
Wall Street losses extended to a fourth consecutive week as fears of an economic crash rose. It seems that Wall Street and high-value stocks struggle with higher interest rates and the rise in materials and service prices. Earlier this week, the PPI report was released and included a significant increase in the product price index.
On Friday morning, Wall Street opened lower. The S&P 500 is down 77 basis points as of 3.45PM New York time, and the Nasdaq is down 288 basis points. On Thursday, Netflix released its new ad subscription feature. The company’s stock fell after that in an instant. As for the Dow Jones average industry, the index is down by 387.125 points, to 29.951 points.
With all of this going on, Saudi Arabia is downgrading the US and siding with the Russians. The inflation in Europe is way too hot and the British pound crashed.
I believe that we are looking at a profit slide at all levels, domestic and international.
Will the market crash?
Today, one of the two biggest banks in the U.S. reported that their profits had declined a bit. JPMorgan Chase & Co, Morgan Stanley, Citigroup Inc, and Wells Fargo & Co’s stocks declined after increasing worries about a gloomy economic outlook.
The case that investors are higher interest rates has affected borrowing and lending costs. Inflationary pressure is pressing to bring down the global central banks. Seperat reports show that these banks profit. As JP Morgan forecasted before, higher interest rates will affect borrowing costs and will cause delayed payments in the future.
All these indications support a higher probability of an economic slowdown, or even an economic collapse, by next year. According to a JP Morgan executive, the bank is well prepared for a market crash and has set aside $808 million in reserves.
The FED minutes released on Wednesday revealed one fact: monetary policymakers remain committed to their plan. After five aggressive interest hikes, marketers were hoping that inflation might shrink to at least 7%. However, the price continues to be too high for the consumer.
The labor market, on the other hand, is recovering from COVID yet remains 5–6 million short of its normal level.
Plus, the energy crisis. OPEC members are refusing the US proposal to increase their daily volume of production.
Some think that the current administration is not up to the challenges and that their decisions are the first reason for the current market turmoil.