Wall Street in freefall
Powell’s speech fuels recession fears
US Federal Reserve Chairman Powell’s highly anticipated speech sends stock markets soaring. The price of gold is increasingly under pressure. Weak US consumer spending is only having a temporary impact on oil prices.
US stock markets reacted to hawkish statements by US Federal Reserve Chairman Jerome Powell with sharp price cuts. In his highly anticipated speech at the Jackson Hole Fed meeting, Powell made it clear that tackling high inflation is a top priority for the Federal Reserve, even at the cost of a recession. The Fed Chairman warned that this would weaken the labor market and be painful for households and businesses alike.
Then he lost Dow Jones index 3.0 percent. Of the S&P500 fell 3.4%. Of the Nasdaq Compound fell 3.9%. Only 442 (Thursday: 2,548) stocks saw price increases, while 2,756 (663) losers were seen. 148 (186) unchanged titles were put up for sale.
The day’s economic data contained ups and downs, but gave no boost to the market, which was completely obsessed with Powell’s statements. The consumer confidence index determined by the University of Michigan rose surprisingly in August. Personal income and spending in the United States were weak in July, but more important was the monthly decline in the PCE price index, showing that price pressures are easing.
ECB hawks limit dollar appreciation
Of the dollar Having benefited only to a limited extent from the prospect of further interest rate hikes in the United States, the dollar index rose 0.3%. The greenback was little changed against the euro late in the session. Because even within the European Central Bank (ECB), the desire to curb inflation in the euro zone seems to be growing. Reuters, citing unnamed sources, reported that some members of the ECB’s Governing Council planned to discuss a 75 basis point rate hike at the September meeting. A looming recession in the Eurozone should neither stop nor slow the normalization of monetary policy. Of the euro then temporarily rose to just above dollar parity.
Bond market prices moved inconsistently. Some investors pulled back on the prospect of higher interest rates. However, some maturities experienced growth thanks to concerns about the economy. Weak consumer spending in the United States weighed on Oil prices only temporarily. The market is oscillating between a possible weakness in demand due to the impending recession in many economic areas on the one hand and a possible shortage of supply due to subsidy cuts by the OPEC+ cartel, traders reported. Of the gold price came under more pressure with Powell’s hawkish statements. In addition, ABN Amro, among others, has significantly lowered its price forecasts at the end of the year.
3M collapses after court ruling
The Dow’s biggest losers have been 3M with minus 9.5 percent. An Indianapolis bankruptcy judge refused to hear the case in Indianapolis bankruptcy court over earplugs for the military that provided insufficient protection, leaving wearers with hearing loss. This solution had previously been granted to the subsidiary of 3M, Aearo Technologies, which was then able to file for bankruptcy (Chapter 11). About 230,000 lawsuits are pending against the company over the earplugs.
Dell Technologies fell 13.5%. The computer maker reported second-quarter sales and net profit below market expectations. working day rose 2.5% after the enterprise software maker announced an increase in sales and subscription revenue in the second quarter. According to the company, the momentum should continue in the third quarter.
For the part of Ultimate beauty was down 1.9%. The cosmetics chain reported second-quarter sales and adjusted earnings above analysts’ expectations, but the stock couldn’t escape the downward spiral.
CAP fell 1.8%. The clothing retailer posted a loss in the second quarter due to lower revenue. However, analysts were expecting a higher minus. On an adjusted basis, a profit was unexpectedly recognized.
Affirm Assets collapsed by 21.3%. The financial services provider reported a higher deficit in the fourth fiscal quarter. The outlook also fell short of market expectations. Marvell Technology fell 8.9% as the technology group disappointed data center sales.
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