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Wednesday, March 29, 2023

Wall Street falls after key US data and fears new rate hikes

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The S&P’s top 11 sectors fell with technology and consumer discretionary leading the losses.

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The three main US indices are on track to close the week with lossesdespite a modest rebound on Thursday, and the Dow Jones heads into its fourth week consecutive backtracking.

The price index for personal consumption expenses (PCE), the Federal Reserve’s preferred inflation gauge, soared 0.6% last month, after rising 0.2% in December.

In the 12 months up to January, the PCE index accelerated to 5.4% after 5.3% in December.

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“This PCE number, which to me is a vital number, strongly suggests that the Federal Reserve needs to do more. Now we are facing a hike of probably half of 1% in March,” he said. Phil Blancato, CEO of Ladenburg Thalmann Asset Management in New York.

“In other wordsthis means that the Fed has not finishedmore pressure for yields to rise, the battle against inflation has not yet been won, and more volatility for the stock market,” he added.

Consumer spending, which accounts for more than two-thirds of US economic activity, rose 1.8% last month, the Commerce Department reported.

After a solid January, equity markets have pulled back this monthas a series of economic data have fueled fears that the US central bank can keep interest rates high for longer, amid signs of sticky inflation and a resilient labor market.

The operators of futures linked to the official interest rate of the Fed raised the bets because the central bank will raise rates at least three more times this year, with the top rate between 5.25% and 5.5% in June.

Mega-cap stocks, such as Tesla Inc, Amazon.com Inc and Nvidia Corp were down between 1.2% and 2.5%at a time when the yield on 10-year US Treasury bonds was rising

Source: Ambito

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