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22.09.2023 04:43 AM
Alarming Signals from Wall Street: How the Fed's Decision Tanked Stocks and Boosted Bond Growth?

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What happened on Wall Street? Last Thursday, the market seemed to turn into a nerve-wracking ride: investors massively sold off stocks due to concerns about the future of the Fed's policy. As a result, three of the "big" market players went down by more than 1%. But that's not all: 10-year US Treasury bonds jumped to a 16-year high, especially after Fed Chairman Jerome Powell made a statement about future inflation.

Who suffered the most? Market giants - Amazon, Nvidia, Apple, and Alphabet - dragged the indexes deep into the red. We are talking about the lowest figures since the summer months.

Fed Meeting: At a recent Fed meeting, rates were left unchanged, set at 5.25%-5.50%. However, analysts suggest that the interest rates might increase throughout the next year, overshadowing hopes for relief until 2025.

Expert Opinion: Thomas Martin, the "brain" behind GLOBALT, expressed concerns: "If rates stay at their peak for a prolonged period, it could suppress the economy." He mentioned several risk factors: student loans, strikes, potential government shutdown, rising oil prices, and even a strengthening dollar.

Conclusion: Wall Street made it clear: tranquility in the financial world is rare. But it's precisely in such moments that new opportunities are born. The key is to stay sharp!

A 9% reduction in US unemployment benefit claims points to a possible strengthening of the labor market, reaching its lowest figures in the last eight months. This fact confirmed the Fed's view that there is significant pressure on wage levels and that the economic situation allows for maintaining higher rates for longer.

Central banks of major economic countries are leaning towards a "more and longer" policy, actively responding to rising inflation.

Morning news briefings, especially regarding the actions of central banks, left an impression on Martin, who underscored their decisive nature.

By 16:12 Eastern Time, the major US stock indexes showed significant declines: Dow Jones by 1.08%, S&P 500 by 1.64%, and Nasdaq Composite by 1.82%. Most sectors of the S&P 500 also posted losses, with the real estate sector experiencing the steepest drop since March.

Broadcom shares decreased by 2.7% amidst news that Google is considering ending its partnership with the company as its primary AI chip supplier by 2027.

The Philadelphia chip index also declined by 1.8%.

Following their market debut, Klaviyo Inc shares rose by 2.9%, while Arm Holdings shares dropped by 1.4%, remaining just a dollar above their starting price.

FedEx delivery company's stock rose by 4.5% due to the announcement of high company profits.

Shares of Fox Corp and News Corp increased by 3.2% and 1.3%, respectively, following the news that Rupert Murdoch will be stepping down from his chairman position.

On the NYSE stock exchange, the number of declining stocks outnumbered the advancing ones, with a ratio of 5.89 to 1. Meanwhile, on the Nasdaq, this ratio was 2.80 to 1 in favor of declining stocks.

During trading, the S&P 500 index reported three new annual highs and 29 new lows. The Nasdaq Composite set 22 new records and 373 new lows.

Trading volume in shares on US exchanges reached 10.76 billion, which is above the average volume of 10.12 billion over the last 20 days.

The CBOE Volatility Index, based on S&P 500 option trades, rose by 15.85%, reaching a new monthly record level of 17.54.

December gold futures dropped by 1.37%, or $26.95, to $1,930.05 per troy ounce. Regarding oil, WTI crude futures for November delivery decreased by 0.11%, or $0.10, to $89.56 per barrel. Meanwhile, Brent crude futures for November fell by 0.32%, or $0.30, to $93.23 per barrel.

In the currency market, the EUR/USD pair remained unchanged at 1.07, while the USD/JPY pair decreased by 0.55%, reaching 147.51.

Dollar index futures showed an increase of 0.27%, reaching a level of 105.07.

Thomas Frank,
Analytical expert of InstaForex
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