US Federal Reserve Chairman Powell has hinted that further rate hikes may be pending in the coming year. The news creates a mood of crisis on Wall Street. The major leading indices are trading with a big minus.
Muted hopes of an end to US interest rate hikes continued to weigh on Wall Street. The Dow Jones lost 2.3 percent to 33,202 points. The tech-heavy Nasdaq fell 3.2 percent to 10,810 jobs and the broad-based S
Fed Chair Jerome Powell raised fears of a prolonged rate hike cycle on Wednesday evening. As expected, the US Federal Reserve “only” increased the key interest rate by half a percentage point – after four interest rate increases of 0.75 points. However, it signaled that further rate hikes will be forthcoming next year. “We will stay the course until the job is done,” Powell said, dampening hopes of rate cuts in the second half of 2023.
In addition, disappointing economic figures increased investor concerns. Retail sales for November fell more than expected. Today’s data reinforces Powell’s view that fighting inflation will take time, said market strategist Sameer Samana of the Wells Fargo Investment Institute. For the same reason, the dollar index, which tracks rates against major currencies, rose nearly 1 percent.
Meanwhile, weak economic data from China fueled suspicions of lower demand for commodities from the top buyer. This pushed the price of US oil WTI down 1.4 percent to $76.21 a barrel (159 liters).
Technology stocks in particular had to accept price losses due to interest rate concerns. Apple, Amazon and Microsoft fell as much as 4.7 percent. Netflix slipped 8.6 percent. According to the online magazine Digiday, the number of users of the new, advertising-financed subscription is only 80 percent of the value that the streaming service has promised to advertisers. They could therefore request discounts.
At Tesla, a billion-dollar sale of shares by Tesla boss and Twitter new owner Elon Musk initially pushed the papers to a two-year low of $ 153.28. However, they then turned positive and closed 0.6 percent higher. He thinks the stock is undervalued, wrote analyst Seth Goldstein from research house Morningstar. Since the electric car manufacturer produces comparatively small numbers, he does not expect a sharp drop in demand despite the looming recession. In addition, Tesla could benefit from government subsidies for its Model 3.
