After Powell’s speech on interest rates
Wall Street is worried
03/09/2023 10:33 p.m
According to a statement by Fed boss Powell, investors are unsettled: Depending on how robust the US labor market is, interest rates should rise more or more slowly. Wall Street dives ahead of Friday’s official data.
Wall Street closed extremely weakly. The willingness of the US Federal Reserve to raise interest rates more sharply, as confirmed by Fed Chairman Jerome Powell this week, caused strong sell-offs. In addition, caution prevailed in the run-up to the US employment market report on Friday tomorrow, which may provide information on the extent of the interest rate hike in March. The Dow Jones Index lost 1.7 percent to 32,255 points. The S&P 500 fell 1.8 percent and the Nasdaq Composite by 2.1 percent. The 451 (Wednesday: 1529) price winners faced 2,642 (1527) losers. 60 (90) titles closed unchanged.
Only in the meantime, some support came from new data, according to which the labor market is a little less robust than expected. The weekly initial applications for unemployment benefits have risen significantly. Compared to the previous week, their number rose by 21,000 to 211,000 on a seasonally adjusted basis. Economists polled by Dow Jones Newswires had only predicted a rise to 195,000. On the other hand, data on employment in the US private sector released on Wednesday was stronger than expected in February, according to Automatic Data Processing Inc (ADP). This indicated that the US labor market would remain robust. The official report expects jobs to increase by 225,000 from 517,000 in January.
“While Powell softened things up a bit on Wednesday by saying nothing was decided yet, the clear message is that future rate decisions will depend on the data, and right now it looks more for a 50 basis point rate hike than a 25 basis point hike in March,” said Russ Mold, investment director at AJ Bell.
Dollar lighter – oil prices stabilized
With donations, the dollar showed after the weekly jobs data. The dollar index lost 0.4 percent. The dollar index remains near a 14-week high after Fed Chairman Powell announced more rate hikes, analysts at Unicredit Research said. But it has stabilized for now as market participants await key monthly US jobs data.
Oil prices were under pressure for the third day in a row. Brent and WTI prices fell 1.4 percent. Fears about the economic impact of rising interest rates weighed on prices. They eclipsed the surprise decline in US crude inventories and hopes for Chinese demand, it said.
Bond market yields eased with weekly initial applications. The 10-year yield fell 6.5 basis points to 3.93 percent, after being above 4.00 percent before the data. The data suggests the job market is softening somewhat due to higher interest rates, it said. The official labor market report is now being awaited.
Uber Technologies weak – Silvergate Capital collapse
Lost in the individual values About Technologies 5 percent. The company is said to be considering spinning off its struggling subsidiary Uber Freight as a separate public company, according to a report. The Bloomberg news agency had referred to unnamed sources after Uber CEO Dara Khosrowshahi said earlier in the week that the freight division would be negatively affected by substantial weakness in the freight and shipping market.
Silvergate Capital fell about 42 percent after the cryptocurrency bank said it was ceasing operations in response to a run on customer deposits. The holding company Silvergate Capital said that the liquidation plan calls for the full repayment of all deposits. Shares in the financial sector came under pressure in the wake. So fell JP Morgan by 5.4 percent and Bank of America by 6.3 percent.