Wall Street suffers as the Fed holds steady and signals continued high-interest rates.
It’s been confirmed that the U.S. Federal Reserve will keep interest rates at the previous rates, and there is a possibility of more increases this year. Wall Street and investors didn’t take the news positively; sticks have fallen and investor sentiments have declined as worries of a market downgrade surface. On top of that, this month’s projections are more like the June projections, which suggest there will be more interest rates this year, or at least one.
As for the Federal Reserve chairman, Jerome Powell, on the Wednesday Fed Minute, he says, “The fact that we’ve come this far lets us really proceed carefully.” Through his note, we conclude that the FED is celebrating its wins against its battle yet is still committed to the battle, which suggests an extract rate in the next meeting, most likely in November.
Powell also noted that forecasts are uncertain, especially when the global market is facing uncertain macroeconomic conditions. Jerome says, “In terms of inflation, you are seeing—the last three readings are very good. It’s only three readings. You know, we were well aware that we needed to see more than three readings. The only concern—and it just means this. If the economy comes in stronger than expected, that just means we’ll have to do more in terms of monetary policy to get back to 2%, because we will get back to 2%.”
Meanwhile, on Wall Street, the stock market main index closed lower on Wednesday and headed to a low session on Thursday. On the other hand, the Treasury yield market skyrocketed. The 10-year Treasury yields climbed by 3% to a critical level estimated at 4.47%, and the 30-year fixed mortgage rates were up by 3.4% to 4.455%. While the 5-year bonds slightly rose by 2% to 4.6%,
Meanwhile, the tech-heavy Nasdaq composite posted the largest losing rate among the big three indexes. The index fell by 1.33%, followed by a 1.17% decline in the S&P 500 benchmark. As for the Dow Jones average industrial, the index has fallen by 0.66%.
In other economic news, FedEx share prices rose by 5.8% after hours on Wednesday.
Based on its earnings report The company exceeded sales outlook expectations. FedEx reported earnings that surpassed expectations due to cost-cutting efforts and gaining customers from UPS and Yellow. However, its revenue of $21.7 billion fell slightly short of estimates due to ongoing demand weaknesses.
Elsewhere, Sweden’s Riksbank and the Norges Bank have lifted their key interest rates by the same rate, which makes it the 14th consecutive rate hike session and the longest interest rate series in their history. Unlike the U.S., Europe still suffers from high consumer product prices. The inflationary pressure is falling but at a slow pace.
As for the oil and energy markets, at last, oil prices cooled down a bit after hitting their highest level for the first time since November 2022. The WTI fell to $89 per barrel, yet Bernt oil has fallen to $93, slightly lower from last week’s peak.