Wall Street indexes plunged today, although they were found to gain more than 1% at the beginning of trading, as the statements of high-ranking officials of the Federal Reserve that the economy is not expected to slide into recession pave the way for more aggressive interest rate hikes in the coming months, at the same time that data released today showed that consumer confidence fell to a 16-month low.
New York Fed Chairman John Williams said today that he expects the US economy to slow down amid tightening Fed monetary policy in the coming months, but added that the US can avoid a recession.
“The recession is not my main scenario right now,” Williams said in an interview with CNBC. “I think the economy is strong,” he added.
However, he estimated that growth will slow down considerably, noting that “this will be a slowdown we want to see” in order to reduce inflationary pressures.
For her part, the head of the San Francisco Fed, Mary Daly, referring to the inflation rally, spoke of a direct threat to the US economy. “Many are worried that the Fed could be too aggressive and could lead to a recession,” Daly said in an interview today. “I am personally concerned that if left unchecked, inflation will be a major obstacle and threat to the US economy and its expansion.”
The Fed, in this context, is “braking” with its interest rate hikes in order to moderate demand, he added. “We are moving in this direction as soon as we can and we hope to see some improvement in the pockets of the citizens soon,” he said.
Finally, he noted that he expects to see the economy slow down, but not stop growing.
Indicators – Statistics
On the board, the Dow Jones lost 491.27 points or -1.56% to 30,946.99 points, while the S&P 500 fell 78.56 points or -2.01% to 3,821.55 points. The technology Nasdaq fell 343.01 points or -2.98% and closed at 11,181.54 points.
Of the 30 stocks that make up the Dow Jones industrial average, only three closed with a positive sign and 27 with a negative one. The biggest gainers were Chevron with gains of $ 2.37 or 1.61% at $ 149.94, followed by Dow with $ 52.53 with gains of 0.59% and UnitedHealth Group with gains of 0, 55% to $ 508.44
The biggest losses were recorded by Nike with a dip of 6.99% after the announcement of profits that exceeded analysts’ estimates, with the sports goods company, however, appearing cautious about the profit margins and its course in China in the near future. Salesforce (-5.43%) and Home Depot (-4.44%) followed.
At the end of the day, the consumer confidence index fell to a 16-month low in June as the price rally in energy, food and other items continues to weigh on consumer psychology.
In particular, according to research by the non-profit organization Conference Board, the index fell to 98.7 points in June from 103.2 points in May, losing the estimates of analysts who expected a softer drop to 100 points, according to a Wall Street poll. Journal.
In the individual data, the index for the current conditions in the economy fell to 147.1 from 147.4 last month, while the index for consumer expectations fell to 66.4 – the lowest level since March 2013 – from 73 , 7 in May.
“Expectations have now fallen below the level of 80, a sign of weak growth in the second half of 2022 as well as an increased risk of recession by the end of the year,” said Lynn Franco, senior director of economic indicators at the Conference Board.
At the same time, government data released today showed that the US trade deficit in goods shrank 2.2% in May to $ 104.3 billion, falling for the second consecutive month after the March record.
The trade deficit reached $ 106.7 billion in April and a record $ 125.6 billion in March.
Housing data released today showed that US house prices remained on an upward trajectory in April, with increases, however, slowing down to an initial sign that upward pressures may begin to decline.
In particular, prices rose 20.4% nationally in April compared to the same month a year earlier, according to the S&P CoreLogic Case-Shiller. In March, the price increase had reached 20.6%.
This is the first slowdown in prices since November last year.