Wall Street slumped as marketers awaited Wednesday’s Federal Reserve meeting decisions
The S&P fell further this week after poor results delivered by FedEx and the automaker Ford. Today morning, Wall Street extended its weekly losses; the S&P declined by 3.63% to reach a total decline of 19% for this year. The tech-heavy Nasdaq decreased by 1.47% to reach a 30% year-over-year decline in its benchmark. The Dow Jones average industrial slumped by 1.68%.
Ford shares declined by 11.9% this morning after rescheduling unit deliveries for the fourth quarter of this year. Ford and other companies reported that they were forced to reschedule their deliveries due to higher material costs and shortages.
The world’s main three economic powerhouses are under massive pressure, and the mixed economic data shows that the growth rate is relatively low compared to the previous forecast.
Next week, the U.S. Federal Reserve will announce its September interest hike rate. This week, the Sweden central banks increased their interest rates by 100%, due to higher inflation and energy bill costs.
For this month’s interest hikes, marketers are pretty much positive that the FED monetary policymakers will go with three-quarter interest hikes.
As for the Treasury bond market, the 10-year Treasury yields remain at 3.5, the highest level in the past 19 years. Treasury yields in the United States rose by 1.75% this morning as investors worried about more aggressive interest rate hikes. It’s crystal clear that the market’s volatility levels have increased this week as investors await the FED decision.
BTC has declined to its lowest level since last June. This morning, Bitcoin’s price fell below $20.000 to $18.888. The tech sell-off due to rising tension between U.S and China had put massive pressure on the Nasdaq’s stock value. This year only the Nasdaq is down by more than 30%, which makes its stock less appealing to investors. The effects of this pressure have spread to the virtual investment market, or crypto market; BTC is down more than 50% this year, as is the second-largest crypto asset, ETH.
On Wednesday, the Federal Reserve meeting will focus on three things: the interest rate hike rate, the targeting inflation rate, and an economic update.
For the first part, we are positive for a third 75 bp interest hikes and even for the fourth interest hike for the next month. The Federal Reserve speakers are committed to taming inflation from last month’s 8.3% to 2%. Goldman Sachs believes that we will see more interest rate hikes this year and in the years to come. Till now, the Federal Reserve has increased its interest rates four times, and the next meeting is the fifth. As Sachs predicted at the start of this year, there will be more than seven hikes this year.
As for the economic data updates, the data indicates very slow economic growth. At best, the Federal Reserve will succeed in its pursuit to tame inflation, but in the long term, the interest rate hikes will do more damage to some businesses.