Wall Street: The Fed changed correlations

LAST UPDATE 21:30

The signs were changed by the minutes of the Fed, whose determination to fight inflation even if it means slowing the economy has given buyers the impetus to come back to the fore.

In particular, the Dow Jones industrial index is now up by 0.6% or 190 points and moves to 31,158 points, the technology-weighted Nasdaq shows gains of 0.7% and is at 11,397 points, while the S&P 500 shows a smaller increase of 0, 2% to 3,848 units.

At 9am Greek time, the minutes of the Fed’s June meeting were published, during which the bank proceeded with its biggest interest rate increase since 1994 (by 0.75%), with its officials stressing the need to fight inflation even if that means a slowdown in the economy, which already appears to be on the brink of recession.

Bank members also said that the next meeting in July will likely see another move of 50 or 75 basis points (+0.5% or +0.75% respectively).

They also estimated that monetary policy moves, which have raised the Fed’s key interest rate to a range of 1.5% – 1.75%, have already had results, tightening financial conditions and reducing some market-based measures of inflation.

But they also recognized that the tightening of monetary policy will likely come at a cost to the pace of economic growth.

In other words, the point on which the attention of investors is almost completely focused, with the indications of an upcoming recession increasing more and more as the so-called inversion of the bond curve was also observed yesterday. That is, the yield on the 10-year US note fell below that of the two-year – one of the most telling signs of a loss of confidence in the economy’s outlook, which consistently suggests a recession is on the way or has already arrived.

However, today the curve has returned to its logical course.

In the same context, despite extremely limited supply, oil (WTI) prices yesterday fell below $100 for the first time since late April, with both contracts plunging as much as 10% on concerns about slowdown in economic activity that will completely destroy the demand for crude oil.

Characteristically, the energy sector of the S&P 500, which was the best performer of all in the first half of the year, lost 4% yesterday.

According to analysts, however, the recession is likely to be mild, while Credit Suisse went further in estimating that it will eventually be avoided, although it lowered its target for the S&P 500 at the end of the year.

″The market was preparing for a recession and now it may actually be embracing it. The idea is: let’s get over it, we’ll have a recession, let’s go, let’s do it. Let’s get rid of the hyperbole and start over,” notes US market guru Ed Yardeni on CNBC.

According to him, “the market is starting to look ahead, to next year and that could very well be a year of recovery from whatever recessionary environment emerges. In a way we’re all doing Hamlet: let there be a recession or not. I believe there will be a mild recession.”

On the board, the top of the Dow Jones is Cisco Systems with gains of 1%, followed by Procter & Gamble with +0.7% and Merck with +0.6%, while on the other hand Chevron makes a new dive of 2.7% and Caterpillar falls by 2.4% while Boeing moves to -1.7%.