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Investors are increasingly worried that the U.S. Federal Reserve, the U.S. Central Bank, will raise interest rates sooner than they expected.
go through Bloomberg
Published on October 22, 2021
The U.S. stock market fell on Friday after the chairman of the Federal Reserve expressed concerns about inflation.
The Standard & Poor’s 500 Index fell 0.1% and the Nasdaq 100 Index fell 0.8% because Jerome Powell stated that the central bank is carefully monitoring price pressures and will adjust accordingly.
Powell stated that global supply chain constraints and shortages that have led to increased inflation “may last longer than previously anticipated, most likely to last until next year,” while adding that as these constraints ease, “this is still the most significant Possible circumstances”.
Investors are increasingly worried that higher cost pressures and bottlenecks in the global supply chain will push the Fed to raise interest rates faster than expected. However, as the benchmark S&P 500 index hit a record high on Thursday, a good start to the earnings season offset these concerns.
Jim Bianco, president and founder of Bianco Research, said on Bloomberg TV and Radio’s “surveillance” program: “The market is increasingly worried that we are in the midst of some kind of longer-term inflation.” Said that if the Fed responds to inflation, stocks will not like it, and if it does not, bonds will not like it. “This is not a good scene.”
The 10-year U.S. Treasury bond yield fell to 1.65%, but it remained high this week. The dollar fell slightly and is expected to fall for the second consecutive week. And got gold.
After disappointing technology earnings overnight, the S&P 500 index fell after struggling to find its direction early in the session. Snap Inc.’s ad spending warning wiped the market value of the social media company and its peers including Facebook Inc., Google’s owner Alphabet Inc., Pinterest Inc. and Twitter Inc. by more than $100 billion. Due to a shortage of parts, sales were also lower than expected.
City Index senior financial market analyst Fiona Cincotta wrote in a report: “The double bad news in the technology industry probably means that it is currently unable to hit a record high.”
However, despite the threat of price pressure, global stock markets are expected to rise for the third consecutive week due to the continued recovery of the health crisis. European stock markets rose on Friday, led by positive earnings consumer stocks. After China Evergrande Group withdrew from the edge of default, Asian stock markets also rose, alleviating concerns about the spread of real estate developers’ troubles.
Crude oil rose, Bitcoin fell to $60,600, and the Russian ruble soared after the Bank of Russia increased borrowing costs more than economists expected.
Some major trends in the market:
stock
- As of 4 pm New York time, the S&P 500 Index fell 0.1%
- The Nasdaq 100 Index drops 0.9%
- Dow Jones Industrial Average rose 0.2%
- MSCI World Index has not changed much
currency
- Bloomberg Dollar Spot Index fell 0.2%
- Euro rose 0.2% to 1.1644 US dollars
- British pound fell 0.2% to 1.3762 US dollars
- The yen rose 0.5% to 113.43 against the dollar
Bond
- The 10-year U.S. Treasury bond yield fell by 5 basis points to 1.64%
- The yield on German 10-year government bonds has hardly changed, at -0.11%
- U.K. 10-year government bond yields fell 6 basis points to 1.15%
commodity
West Texas Intermediate crude oil rose 1.9% to $84.07 per barrel
Gold futures rose 0.7% to $1,795 an ounce
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