2023-05-03 22:01:34
The Federal Reserve frustrates the stock markets.. and the Dow Jones loses 270 points
The US Federal Reserve decided to raise the interest on its funds, at its tenth meeting in a row, by a quarter of a percent, to reach the range of 5%-5.25% for the first time since 2007, and the bank president ruled out a rate cut before the end of the year, so stock indices erased their modest gains, and the index ended The Dow Jones Industrial Average declined today by 0.80% of its value, representing 270 points.
Stocks rebounded in the first minutes of the press conference that followed the announcement of the bank’s decision to raise interest, when Powell hinted at the possibility of stopping raising at the current level, but they fell sharply when the bank’s president ruled out the realization of what the markets currently reflect of the shift to cut interest in 2023.
During trading on Wednesday, which investors have been waiting for since March, which witnessed the last meeting of the largest central bank in the world, the Nasdaq index, which is more sensitive to interest changes, also fell by nearly half a percentage point, while the loss of the S&P 500 index exceeded two-thirds. percentage point.
Powell stressed that the road to reach the inflation rate to its target level of 2% is still long, but he assured journalists, and the millions who followed him live, the safety of the American banking system, despite the collapse of three American banks in less than two months.
In Europe, European stocks rose today, Wednesday, ahead of the Fed’s decision announcement, as investors turned optimistic regarding the possibility that the Federal Reserve might signal a pause in the 14-month-old monetary tightening cycle, following one last hike in interest rates later in the day.
Despite the sincerity of the European markets’ expectations in this regard, most dealers did not wait to rule out the interest rate cut this year, which caused the STOXX 600 European stock index to rise, before it fell to end the day up by 0.3%, following a sharp sell-off in the previous session.
Oil and gas companies topped the index gains, up 0.6%, recovering from losses in Tuesday’s session.
In a related way, the losses in oil prices accelerated following the announcement of the Federal Reserve’s decision, to continue its sharp losses from the previous session, with the growing expectations of the US economy entering a recession.
Benchmark Brent crude futures fell nearly $3, or 4%, to $72.33 a barrel, the lowest close for crude since December 2021.
Brent crude hit a session low of $71.70 a barrel, the lowest since March 20.
Also, US West Texas crude lost more than $ 3, or 4.3%, to reach a price of $ 68.60 a barrel, following it recorded $ 67.95 in the lowest moments of the day, which is the lowest price since March 24.
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