Wall Street: Lost momentum after Powell

LAST UPDATE 20:55

The key indicators of the American market, which cut their profits after the deposit of the central banker Powell in the Congress, are trying to find their pace again, while the investors are evaluating the possibilities of an impending recession.

In particular, the Dow Jones industrial average is now falling to 30,403 points with a fall of 0.3%.

The enlarged S&P 500, which also passed in negative territory, is now marginally green and is trading at 3,762 points, while the technologically weighted Nasdaq is up 0.5%, moving to 11,086 points.

It is noted, however, that the three indices started the session with significant gains on a weekly basis, with the Dow Jones at + 2% and the S&P 500 and Nasdaq strengthening above 2%.

However, as Todd Jones, CEO of Gratus Capital, points out, the bounce of the indicators does not indicate any general reversal of the course from the oversold levels.

“For us, to believe that this is a more stable move, we should definitely see an improvement not only in some of the economic data, but I think mainly in inflation,” he said.

The relatively good performance that the market showed at the beginning of the session was largely halted after the second day in the congress of the Fed head Jerome Powell, who adopted an even more aggressive tone than yesterday, saying that the bank will fight the “unconditional” inflation

The central banker also reiterated that the Fed still hopes to achieve a mild economic downturn, but acknowledged that this is now difficult.

“It has become much more difficult with the events of recent months and especially with the war that has pushed up gas prices,” he said, noting, however, that the Fed “does not believe a recession is inevitable.”

J. Powell also acknowledged that “there is a risk of rising unemployment”, but pointed out “from a historically low level” where he is.

The market closed yesterday with negative signs, albeit with marginal losses, with investors now increasingly considering the possibility of an impending recession, which international companies now consider to be more likely.

Golman Sachs, Deutsche Bank and Citigroup all now estimate that the chances of a recession are at 50% for 2023, according to a report by an Fed analyst released on Tuesday.

For its part, UBS increased the chances of recession to 69%, citing last week’s weak data on the housing market, industrial production and capital goods.

“The odds are in favor of a recession rather than the opposite,” Dan Greenakhaus, chief strategist at Solus Alternative Asset Management, told CNBC. “It’s something of a degree of monetary tightening that the Federal Reserve needs to do now, something it did not do in the past when some of the problems that are going to happen now might have been avoided.”

“Unfortunately, the ‘financial pain’ will be greater than people expected at least six months ago, but they are becoming more and more aware of the fact that this is likely to happen,” he added.

On the labor market front, unemployment benefit claims levels remained close to a five-month high, but at around 230,000 which is a fairly low number overall.

At the same time, the US current account deficit jumped to a new record in the first quarter of the year to $ 291.4 billion, well above the $ 273.5 billion expected by analysts.