Intense volatility and alternation of signs on the Wall, for fear of recession

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Concerns about the recession came back to the forefront on Wednesday, reviving pressure on indices and intensifying volatility on the board as investors focused on Federal Reserve Chairman Jerome Powell’s report to the Finance Committee.

In particular, the Dow Jones industrial average, which started the day with a fall of more than 1%, reacted and turned positive, succumbed to the pressures again and returned to negative territory, currently losing 53.64 points or 0.18% at 30,476 , 61 units. A similar course was followed by the wider S&P 500, which from -1% of the first minutes, turned upwards and went back to the “red”, falling by 0.17% to 3,758.30 points. As for the technological Nasdaq, which was the first to go green, it is struggling to maintain its positive sign, moving at 11,074.35 points and at + 0.05%.

Yesterday, after three weeks of losses, the “dip” of the S&P 500 in bear market last Monday and the three-day break that followed in the American market (due to the Juneteenth holiday on Monday), the Wall indices reacted, with the Dow Jones add more than 640 points or 2.2% and the S&P 500 and Nasdaq boost by 2.5% each.

However, the market rebound is proving difficult as investors ‘and analysts’ fears of a recession remain, as the Fed chief confirmed today, on the first day of his filing with the Senate Finance Committee, that the Fed’s intention to continue its “attack” on inflation, reiterating the “unwavering commitment” of policymakers to reduce inflation from the 40-year high it has climbed.

“It is crucial that we reduce inflation in order to have a prolonged period of strong labor market conditions for the benefit of all citizens,” the US Federal Reserve said in a statement to the Senate.

He said inflation remained well above the Fed’s official target of 2%, although there was some evidence that the non-food price and energy cost index, two major categories, could have peaked or even peaked. has declined somewhat in the last month.

He added, however, that so far inflation has surprised and it is not ruled out that other surprises may follow, justifying the aggressive policy pursued by the Fed.

“We believe that the forthcoming interest rate hikes will be appropriate; the pace of these changes will continue to depend on the incoming data and the evolving economic outlook,” Powell said, adding that “we will make our decisions from meeting to meeting and continue to communicate our reasoning as clearly as possible “.

At the same time, he assured that the US economy is very strong and can withstand a tighter monetary policy and consequently the interest rate hikes that will follow.

Powell’s statements, however, do little to allay investor concerns that a sharp rise in interest rates by the Fed to curb rampant inflation will eventually lead to a downturn in the US economy, raising risk aversion and shifting away from investing. items such as shares.


Source: Capital

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