Wall Street is enjoying a new day in red this Friday, and is about to close its worst week since January. The worst hit was the Dow Jones Industrial Average, which fell more than 1% after a senior Federal Reserve official said inflation was stronger than they expected and that the central bank would take several meetings to figure out how to reduce your massive bond purchases.
The official is James Bullard, president of St. Louis Federer and one of the most influential economists in the United States. In particular, he said he was Of the seven executives who expected the rate hike to start next year. In principle, this will be at the end of 2022.
All codes give negative numbers. The S&P 500 was down about 0.8% and the Nasdaq, mainly by technology companies, was down 0.6%., Is slightly better at resisting the recession.
The CBOE volatility index, an indicator of Wall Street fears, rose to 20.60 points, May 21 at most, after Bullard’s statements. “This perception has raised concerns about inflation, and people are wondering how long it will actually be; most data show an increase of more than 3% by the end of this year,” said Sam Stowell, a CFRA research strategist.
New York Square has been affected since the beginning of the week, after the FED unexpectedly pointed it out You may start to reduce your impulses more than you expected, The S&P 500 is on track to gain three weeks of success. The impact on technology stocks was lower as the Federal Reserve predicted that the economy would grow 7 percent faster than expected this year.
After their two-day meeting, the Federal Reserve’s Federal Open Market Committee (FOMC, in English for short) explained in a statement that thanks to the progress of the vaccine campaign in the United States, it has reduced the prevalence of COVID-19, and Indicators of economic activity and employment have been “strengthened” due to the government’s “strong political support”.
With the change in the growth plan, which was estimated at 6.5% in March, it was decided not to keep interest rates close to 0% now, despite rising inflation. In this way, The reference rate is at the same level as it was since March 2020, When the US Federal Reserve implemented two rate cuts due to the effects of the COVID-19 epidemic on the US economy.
In its analysis, the FOMC recognized that inflation “It has increased”, but it is said to be “mostly due to intermediate factors”. This reading agrees with the US Secretary of the Treasury, Janet Yellen, Which on Wednesday insisted precisely that prices were rebounding in the country It responds to “temporary” and “intermediate” factors, particularly those associated with the resumption of the economy after a stroke caused by a corona virus infection.
Federal President Jerome Powell has also reconsidered it This rebound in prices is temporary and responds to the reopening of economic activity as COVID-19 cases continue to fall in the United States. The American labor market was created 559,000 non-farm jobs last May. On its side, unemployment fell to 5.8%, thus retaining the job recovery that began a year ago after the epidemic destroyed nearly 21 million jobs.
(With Reuters information)