The Dow Jones continues to fall. Recently, it collapsed more than 700 points following revealing retail sales numbers fell more than expected. As a result, investors are worried that the US Federal Reserve (Fed) moving forward to raise interest rates will drag the US economy into recession.
As of 10:05 p.m. Thai time, the Dow Jones Industrial Average was 33,258.43 points, minus 707.92 points or 2.08%.
The market is also under pressure from the strong dollar. This will affect the profits of listed companies earning income from abroad.
The US Commerce Department said Retail sales fell 0.6 percent in November, the biggest drop in 11 months, while analysts had expected a 0.1 percent drop following surging 1.3 percent in October.
Retail sales are affected by inflation. which resulted in an increase in product prices while savings decrease Amid weak economic outlook
Basic retail sales Sales of cars, gasoline, construction materials and food, which excluded cars, fell 0.2 percent in November following gaining 0.5 percent in October.
The Federal Open Market Committee (FOMC) unanimously raised the short-term interest rate by 0.50% to a range of 4.25-4.50% at its meeting yesterday. which is the highest level in 15 years.
In their policy interest rate expectations (Dot Plot), Fed officials expect to continue to raise interest rates in 2023 and not cut them until 2024, when the Fed raises interest rates to the highest level. 5.1% next year, above market expectations. and will maintain the interest rate at that level for a period of time to keep an eye on the impact of tightening monetary policy on the US economy
Sylvia Jablonski, CEO and chief investment officer of Defiance ETFs, said the Fed’s tightening monetary policy is hampering the “Santa Rally” this year.
“The Fed is blocking the way for Santa’s sleigh,” Jablonski said.
Ms Jablonski stated that Fed Chairman Jerome Powell’s statement sent a strong and clear signal. He has no plans to slow down. Or deviate from the Fed’s interest rate hike.
“The Fed will raise interest rates higher and longer. and monetary policy will be tighter than expected While the market will be pressured for a longer time from the Fed’s policy. Despite the temporary rebound in response to the previous CPI numbers, the Fed’s stance will expose the market to near-term volatility,” Jablonski said.
The “Santa Rally” usually lasts seven business days, with the last five business days of the current year as well as the first two days of the new year.
The Labor Department reported initial claims for unemployment benefits fell 20,000 to a seasonally adjusted 211,000 last week. which is the lowest level since September. And below analysts’ expectations of 230,000.
The number of applicants for unemployment benefits was below 215,000, the pre-COVID-19 weekly average in the United States.
At the same time, the US Department of Labor reported that Number of Americans Still Claiming Unemployment Benefits increased to 1.671 million
