Federal Reserve continues its battle with inflation.
The latest rate boost by the Federal Reserve is expected to keep markets on edge for the upcoming week, which will be shorter due to the holidays. For the first time ever, Wall Street will be closed on Juneteenth, a holiday commemorating the founding of the United States of America.
It was the worst week for the S&P 500 since March 2020, when it lost 5.8% after entering a bear market Monday. As a result of the decrease, this was the benchmark index’s 10th weekly loss.
On Wednesday, the US central bank hiked its benchmark interest rate by 75 basis points, the highest increase in over three decades.. Powell also hinted at more aggressive tightening ahead as officials crank up their efforts to combat inflation.
The move threw markets into a tailspin and sparked a wave of recession calls on Wall Street.
It was a rough week for the Dow Jones, with the index dipping below the 30,000 mark. The Nasdaq recovered some of its losses to end the week higher on Friday, but it was still down around 1.7% for the week. This past weekend, for the first time since 2020, the price of bitcoin (BTC-USD) fell below $18,000.
Investors and analysts worry that the Fed’s unprecedented assault on inflation on Wednesday has increased the possibility that its anti-recessionary policies have pushed the economy into a recession.
It’s been verified that the Fed is playing a perilous catch-up game, analysts at Bank of America wrote in a note on Friday. There is a 40% likelihood of a recession next year, according to the company’s GDP growth estimate.
A “boom-bust scenario” was the largest threat to the US economy in the spring of 2021, according to the bank’s research team. Boom-bust has been our “baseline forecast” throughout time.
Analysts at JPMorgan, however, warned that the S&P 500’s drop suggests an 85 percent probability of recession.
The Senate Banking Committee is scheduled to hear from Federal Reserve Chairman Jerome Powell on Wednesday morning.
A “soft landing,” a time in which economic growth is slowed just enough to reduce inflation but without sparking an economic downturn, has become more unpopular among investors, but Fed Chairman Jerome Powell has refused to back down.
Powell told reporters on Wednesday, “Let’s be clear: we’re not aiming to cause a recession right now. Federal Reserve Chairman Jerome Powell also reaffirmed the central bank’s mission to rein in rising prices during remarks at a Washington conference on Friday.
The Senate Banking Committee is scheduled to hear from Federal Reserve Chairman Jerome Powell on Wednesday morning.
A “soft landing,” a time in which economic growth is slowed just enough to reduce inflation but without sparking an economic downturn, has become more unpopular among investors, but Fed Chairman Jerome Powell has refused to back down.
Powell told reporters on Wednesday, “Let’s be clear: we’re not aiming to cause a recession right now. Federal Reserve Chairman Jerome Powell also reaffirmed the central bank’s mission to rein in rising prices during remarks at a Washington conference on Friday.
The next week will see the release of another important indicator of consumer sentiment. According to the study, consumer confidence dropped to its lowest level in survey history in June as the cost of living continues to rise. The final reading on the University of Michigan’s sentiment index is set to be released soon.
