U.S. stocks erased earlier losses and stocks rose after Federal Reserve Chairman Jerome Powell reiterated his commitment to curb inflation during his testimony in Congress, rekindling fears that the central bank’s aggressive path to raising interest rates percentages could turn the economy into recession.
The S&P 500 and the technological Nasdaq 100 have risen. Government bond yields declined, with 10-year yields hovering around 3.15%. The dollar fell after earlier gains, while other asylum assets such as gold rose.
The S&P 500 is ready for its worst first half of Richard Nixon’s presidency, as optimism evaporates that politicians can make a soft landing as they move toward an aggressive monetary tightening to curb inflation. Powell said on Wednesday that the central bank would continue to raise interest rates to reduce inflation, mostly reiterating its comments from last week. He did not mention the size of future campaigns during his testimony.
“Such an aggressive tightening will make a soft landing very difficult to design, and these fears of a recession or at least significantly slower growth are hitting demand for stocks,” said Fiona Sincota, a senior financial markets analyst at City Index.
Poor harvest The S&P 500 was set for its worst first half of 1970. The market remains skeptical about the prospects for risky assets. Deutsche Bank AG CEO Christian Schuing has joined a growing chorus of executives and politicians who warn that the global economy may be heading for a recession as central banks step up efforts to curb inflation.
West Texas Intermediate crude fell below $ 103 a barrel, with prices falling along with other commodities, including copper. Concerns about the widespread economic slowdown overshadow the effects of the war in Ukraine and signs of still limited supplies.
President Joe Biden plans to call on Congress to introduce a tax holiday on gasoline to cool rising pump prices and ease pressure on consumers.
In Europe, stocks fell on the first day of this week as miners and energy fell with commodity prices.
What to watch this week:
- Fed Chairman Jerome Powell’s six-month Senate testimony Wednesday
- Powell’s testimony at the US House of Commons, Thursday
- Initial applications for unemployment in the United States, Thursday
- PMI for the euro area, France, Germany, United Kingdom, Australia, Thursday
- ECB Economic Bulletin, Thursday
- Consumer sentiment at the American University of Michigan, Friday
- Lowe of the RBA spoke at a panel Friday
Some of the main market movements:
Stocks
- The S&P 500 rose 0.2% at 10:20 a.m. New York
- The Nasdaq 100 rose 0.7%.
- The Dow Jones industrial average has changed little
- Stoxx Europe 600 fell 1.2%.
- The MSCI World Index rose 1.9 percent
Currencies
- The Bloomberg Dollar spot index fell 0.1%.
- The euro rose 0.2% to $ 1.0558
- The British pound fell 0.1% to $ 1.2264
- The Japanese yen rose 0.4% to 135.97 per dollar
Bonds
- 10-year bond yields down 11 basis points to 3.16%
- Germany’s 10-year yield fell 15 basis points to 1.62%
- Britain’s 10-year yield fell 19 basis points to 2.47%
Goods
- West Texas Intermediate crude fell 6.4% to $ 102.48 a barrel
- Gold futures rose 0.4 percent to $ 1,846 an ounce
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