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Friday, July 1, 2022

Stocks up and down a day after Wall Street plunged into a bear market

NEW YORK ( Associated Press) – Wall Street faltered in its first trading Tuesday in a bear market on worries that high inflation would prompt central banks to apply the brakes on the economy too hard.

watch: Markets tumble amid fears of sharply higher interest rates

The S&P 500 was down 0.2 percent in afternoon trading as investors prepared for the Federal Reserve’s announcement on Wednesday about what it would do with interest rates. However, it was a volatile move, and the index fell between an earlier loss of 0.5 percent and a gain of 0.8 percent, when some of the larger companies flexed financial strength with strong gains and payouts to shareholders.

The Dow Jones Industrial Average was down 168 points, or 0.6 percent, at 30,350 as of 12:20 p.m. Eastern Time, and the Nasdaq Composite was up 0.3 percent after swinging between a 0.9 percent gain and a 0.4 percent loss.

Trading in the markets was calm, if still tentative, after Monday’s worldwide trajectory. Shares across Asia and Europe were mixed, while Wall Street investors were easing panic.

Cryptocurrency was mixed. They have been the hardest hit en route this year for markets as the Federal Reserve and other central banks raise interest rates to curb inflation and forcefully shut down the “easy mode” that has helped propel markets for years. Of. According to CoinDesk, bitcoin cut its losses by 5 percent and sat at $22,614. It fell by nearly 70 percent overnight from the record high of $68,990.90 set late last year.

Offering some support to the market was a report showing that wholesale inflation was a touch lower than expected in May, although it remains very high. According to Jack Ablin, chief investment officer at Crescent Capital Management, this could be a sign that wholesale inflation peaked in March.

Economists said the data would not prevent the Federal Reserve from raising its key interest rate more than usual this week, with some forecasting the biggest increase since 1994 to triple the usual move. But data on consumer level inflation was not as influencing the market as last week’s, suggesting inflation is getting worse, not better as some investors had hoped.

Treasury yields were churning up and down and remain close to their highest level in more than a decade, reached on Monday. They also have a relatively reliable warning sign of a recession in the bond market that is flashing on and off.

In afternoon trade, the yield on the two-year Treasury had fallen below the 10-year yield at 3.43 per cent versus 3.45 per cent. How things usually look in the bond market.

In unusual circumstances where the two-year yield tops the 10-year yield, some investors see this as a sign that a recession may occur in about a year or two. This is called the “inverted yield curve,” and it has been intermittently brightening over the past day.

On Wall Street, Oracle rose 9 percent after reporting stronger revenue and earnings for its latest quarter than analysts expected. It jumped 12.3 percent after FedEx increased its dividend payout by more than 50 percent.

It was the first trade for US stocks on Monday since the S&P 500 closed down 21.8 percent from its record set earlier this year. This put it in a bear market, which investors call a decline of 20 percent or more.

Read more: Nationwide average for gasoline tops $5 per gallon, AAA says

At the heart of the sell-off is the US Federal Reserve’s attempt to control inflation by raising interest rates. The Fed is scrambling to bring prices under control and its main method is to raise rates, but this is a blunt tool that can greatly slow down the economy and cause a recession.

“The real calm in today’s market is driven largely by the focus on this week’s Fed decision.” Greg Basuk, CEO of AXS Investments, said. “Today is either the calm before the storm or the calm that will hopefully represent an extended period of peace.”

Other central banks around the world, including the Bank of England, are also raising rates, while the European Central Bank said it would do so next month and into September.

The war in Ukraine is rapidly raising oil and food prices, fueling inflation and reducing consumer spending, especially in Europe. Meanwhile, the COVID infection in China has led to some tough, business-slowing restrictions that threaten to smother the world’s second-largest economy and worsen poor supply chains.

“The old, pre-corona equilibrium with low inflation, ultraloose monetary policy and low geopolitical risk premium is no longer there,” said Andreas Koester, head of portfolio management at Union Investments in Frankfurt, Germany.

“We are now in a transition to a new, post-corona balance, of which only the framework is visible, such as high inflation levels or the return of great power competition on the international scene,” Koester said.

The shift toward higher interest rates by central banks, especially the Fed, has reversed a spectacular rise in stock prices in early 2020 due to massive support for markets after the pandemic hit. Markets are set to rise above normal at the top. There were some discouraging signs about the economy and corporate profits, including record-low preliminary readings on consumer sentiment due to higher gasoline prices.

Higher interest rates usually make investors less willing to pay higher prices for risky investments. That’s why some of the biggest stars from the previously low-rate era have been worst hit en route this year, including bitcoin and high-growth technology stocks like Netflix, which are down more than 70 percent in 2022.

Associated Press Business Writers Damien J. Trois and Yuri Kageyama contributed.

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
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